XM Satellite Radio/MCTSatellite radio companies XM and Sirius announced their plans to merge on Monday, Feb. 19.
The merger will result in offering satellite radio consumers more variety to their radio programming. News, sports programming, music and talk shows will still be offered, but with more to choose from including Sirius’s Howard Stern and XM’s Oprah Winfrey.
The companies have yet to announce their headquarters’ location and its new name. They have however, come up with who will be heading the company. XM Chairman Gary Parsons will remain chairman and Sirius’ Mel Karmazin will become the merger’s CEO.
While the news sounds good for someone who is looking for radio programming that satisfies every household member, there’s a bit of legal problem.
According to by the Washington Post before the two can combine, “the companies must persuade the Justice Department and Federal Communications Commission that they are complying with antitrust laws, a claim that land-based broadcaster and consumer groups are likely to dispute.”
These rules, however, can be change according to FCC Chairman Kevin J. Martin, only if it’s for the better. “The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices.”
Antitrust lawyer William Baer said, ” At the end of the day, they have to be able to show that the pricing of satellite radio is going to be constrained by these alternative forms of listening, such as standard radio, iPods, Internet radio and cell phones.”
Sirius, who got a head start in 2000, “has reported losses of 3.4 billion over five years,” according to the Washington Post.
Both companies started their mission with high hopes, spending millions to make their company better than the competition’s.
“Sirius spent $500 million over five years to employ Stern, who earned another $300 million in stock for meeting certain subscriber goals.” “XM signed Winfrey to a three-year, $55 million contract,” according to the Washingtn Post.
Despite some losses and expected spending; the companies have merged to join the best of both worlds and boost their revenue.
