The Implications of a Satellite Radio Merger


by JayRobertson - Date: 2007-07-24 - Word Count: 448 Share This!

There is a merger in the works for the two United States satellite radio services, and the companies say it should be complete by the end of the year. The only potential roadblock to the merger between Sirius Satellite Radio and XM Satellite Radio is the Federal Communications Commission.

The FCC has concerns that the merger between the two satellite radio services would constitute a monopoly on the satellite radio service market. Representatives from both Sirius and XM insist that satellite radio must still compete equally with all the expanded radio and MP3 technologies that are on the market today.

XM Satellite Radio and Sirius Satellite Radio have put together a crack team of lobbyists to help with their fight to merge. Sirius and XM have also hired some of the most exclusive and expensive lawyers. The biggest problem for the merger is a 1997 Federal Communications Commission declaration that a single owner may not control the market for any one industry. The FCC says the Sirius-XM merger would put the satellite radio companies in control of the entire market.

"Consumers today have a significantly broader range of audio entertainment options from which to choose," said Mel Karmazin, Sirius Chief Executive Officer. He is referring to the advancing technology of other media products such as MP3 players, music-playing cellular phones and land-based radio stations with digital broadcasts. Karmazin says these media technologies offer so much music, news and talk that the competition among the industries is different than at any other time. He believes the FCC should waive the 1997 rule.

The two satellite radio services have spent a great deal of money already on exclusive on-air personalities such as Howard Stern and Oprah Winfrey, and on marketing to compete with each other. The companies say the merger would help to reduce the subscription cost for consumers, and also assured customers via email that services would not change during the merger proceedings.

Karmazin insists that a satellite radio merger would be advantageous to consumers, because it would eliminate duplicate programming between services and reduce operation costs. The satellite radio services will also allow consumers to get signals from both services on their satellite radio receivers. The merger may also be beneficial to share holders, since shares of both XM and Sirius stock have gone up since talk of the merger began.

As of today, the two satellite radio services are two separate corporate entities. Consumers must still decide on one satellite radio company for their satellite radio receiver, accessories and subscription, but who knows what the future may bring?


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Related Tags: radio, merger, sirius, fcc, xm, sattelite

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