Seems that XM and Sirius will merge soon. The two rivals of the satellite radio industry have announced today that they have reached an agreement and will merge as equals. Shareholders of both XM Satellite Radio Holdings, Inc. and Sirius Satellite Radio, Inc. will own about 50% each of the new entity.
Once XM and Sirius merge together it will be Mel Karmazin who is currently the Chief Executive for Sirius Satellite leading the combined entity. Hugh Panero, the Chief Executive Officer for XM, will remain in place only until this deal is finalized.
Because of the FCC, the merger between XM and Sirius will run into hurdles in Washington. The Provision in place states that the two companies are forbidden to combine. The FCC could change the rule but there was a statement given by FCC Chairman Kevin Martin in which he said “The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices”. Kevin Martin went on to state that “the hurdle would be high to prove that the deal would be in the public interest”.
XM and Sirius will also need to get antitrust approval from the Department of Justice. The argument which will be used is that XM and Sirius not only compete with each other but with traditional radio as well as ipods, mobile phones and digital radio.
So what is the name of the new entity? There isn’t one yet. A statement was made that both XM and Sirius would work together in coming up with both a new name and also deciding where the new entity will be located and also who is going to sell XM and Sirius radios to listen to the satellite feed.
The National Association of Broadcasters, which is a group representing radio companies, is speaking out to the federal regulators asking them to block the deal between XM and Sirius.