FCC approves Sirius-XM satellite radio merger

The Federal Communications Commission on Friday formally approved Sirius Satellite Radio's $3.3 billion buyout of former competitor XM Satellite Radio with conditions.

FCC commissioners voted 3-2 to approve the merger, which will unite the nation's only two satellite radio providers and allow more than 18 million subscribers to receive programming from both services. Executives say that the merger will lead to huge cost savings and the first profits in the industry.

Republican Commissioner Deborah Taylor Tate cast the tie-breaking vote after the companies agreed to a three-year cap on prices, set aside 8 percent of their channel capacity for minority and noncommercial programming, and agreed to pay $19.7 million for past FCC rule violations. The companies also agreed to bring interoperable radios to the market within a year.

FCC Chairman Kevin Martin confirmed the final vote Friday night.

"The merger is in the public interest and will provide consumers with greater flexibility and choices," Martin said in a statement.

The FCC was the final regulatory hurdle the companies needed to clear to move the merger forward. The deal, which was valued at $13 billion in February 2007 when it was announced, was approved by XM and Sirius shareholders last December.

Originally, the agency barred satellite radio companies from combining. Critics said a merger would create a monopoly, but executives argued that satellite radio faces more competition from Internet music services, music playing phones, and online music stores like Apple's iTunes that allow people to play music on iPods.

While the proposed merger sailed through a U.S. Department of Justice review without conditions, key congressional Democrats had urged the FCC to impose limits designed to protect consumers.

[gsmiller88]

How can this not be considered a monopoly?!

[Phloptical]

Easily. Don't purchase the service and you can get all the free AM/FM radio you want.

[j_d_mayo]

Nobody is forcing you to purchase it. Therefore, not a monopoly. I for one, am a subscriber and, yes, am a somewhat worried about price hikes, but i would much rather pay for good commercial/censor free radio than listen to the crap that free airwaves shuffle around on Mix 96. Have you heard some of todays "new" music. It's awful.

[Gangularis]

I'm sorry, but the definition of a monopoly does not have a thing to do with a product or a service that you are "forced" to purchase. So "you, for one" don't know what you're talking about. Technically, this means the service will be a monopoly, with regards to satellite radio. Only compared to the broader spectrum of choices with regards to the way we get our music, is it not considered a monopoly.

[BCF1968]

"by gsmiller88 July 25, 2008 9:00 PM PDT How can this not be considered a monopoly?! "

Well if they didn't merge one or both would have gone out of business and you'd be left with just one or perhaps NO satelite radio companies. Is that better?

Not to mention you can still get regular radio and internet radio. So no it's not a monopoly.

[Gangularis]

I'm sorry, but the definition of a monopoly does not have a thing to do with a product or a service that you are "forced" to purchase. So "you, for one" don't know what you're talking about. Technically, this means the service will be a monopoly, with regards to satellite radio. Only compared to the broader spectrum of choices with regards to the way we get our music, is it not considered a monopoly.

[BCF1968]

So it would be better not to let the merger go through and have one of the 2 go out of business and leave it's millions of customers out in the lurch? Then with the competiton out of the way the surviving company can jack up rates immediately? With this deal prices are locked for 3 years.

[Brian_Halcyon]

But what you are failing to understand is that you do have a choice for in car entertainment. The unique delivery of content can not substantiate Satellite Radio as a monopoly. The content is what they sell, all of which you have alternative choices for similar content or the same content in a different delivery mechanism.

Sirius/XM will know that they can not raise prices radically given that people have the alternative sources for music, news and talk radio, many of which are free or a similar monthly price, terrestrial radio, HD Radio, monthly music subscription services, etc.

People try to draw parallels between this and the merger between satellite TV networks that was stopped under monopoly fears. For many rural households, satellite TV is their only source for the content that is delivered. Knowing this, the merged company would have been able to increase rates drastically as those customers do not have an alternative source. However, those same rural customers do have alternatives to satellite radio. FM has a larger broadcast area TV, AM much larger, and they can buy songs for their ipods, mail-order cds and stream audio (yes, even over dial-up).

I am a Sirius subscriber and have supported the merger since day one. I also have a subscription based music service, stream audio online and occasionally listen to local talk radio for news and weather. If I could not get my entertainment form anywhere but Siruius, then it would be a monopoly.

[punterjoe]

How convenient that the rules under which both services gained their franchise can simply be thrown out the window because it's inconvenient for the bottom line.
I've been a subscriber (with multiple sets, so I pay above the baseline) for years. I like satellite radio - but not as much as I detest monopolies, so I guess it's time to put my subscription fees toward online radio. Anyone want to buy some Delphi paperweights? :)

[MCOjerry]

"by punterjoe July 26, 2008 1:03 AM PDT
How convenient that the rules under which both services gained their franchise can simply be thrown out the window because it's inconvenient for the bottom line.
I've been a subscriber (with multiple sets, so I pay above the baseline) for years. I like satellite radio - but not as much as I detest monopolies, so I guess it's time to put my subscription fees toward online radio. Anyone want to buy some Delphi paperweights?"..........................................come on punterjoe, aren't you beng a bit melodramatic? Wouldn't it be better to wait and see what happens. If, in 3 years; subscription fees increase, then perhaps you can make these statements. However, keep in mind that a satellite radio hasn't been making much $, if any...so you'd likely be looking at a price increase anyway, just to keep the service going. By putting the companies together, perhaps there will be significant cost savings that will help them be more profitable. I just hope that they poll subscribers before ditching any channels. I want Sirius 22 (First Wave) to make it through the merger. Other than Howard, it's the channel I listen to the most. I think that we need to give this a chance. Besides, if the company does take on monopolistic characteristics and turns out to NOT be in the best interest of the public, do thing the FCC will wast any time in breaking the company up? They did impose restrictions.

[Dead Soulman]

Does anyone remember the HD format war between HD-DVD and Blu-ray and how well it has worked out in lowering the prices of the hardware and software/content? I'm very skeptic of "mergers" like this one because they become a monopoly. Yes, you're not being forced to buy into it, but if you want the service there's only one company you must do business with. It's similar to cable tv, telephone service, electric service, and internet. When a customer wants a service and he/she has only one choice to choose from, that's the definition of a monopoly. I don't particularly care for satellite radio at all. However, as a consumer, I think plenty of you are turning the other cheek believing this whole thing is ok. Rates will go up and anyone who has invested hundreds on equipment will more than likely pay for the increase. If you think that's ok, then good luck. It's your money after all.

[Phloptical]

No one is putting a gun to your head, and forcing you to pay a monthly fee for programming. The market will determine the price, as is the case for all monthly based service schemes.

[blizzardboy]

Of course at some point rates will go up. As with any service you will have rate increases. I for one don't like to pay an increase but if the service is good and the increase is reasonable then it is an easier pill to swallow. My opinion is that this is good for both companies and will benefit most of us as subscribers. Like others have said you have choices. If you are unhappy with the merger and don't like the end result or if rates increase you can cancel your subscription and listen to AM/FM, your Ipod, CDs, MP3's, Cassetes, Phone, etc. You get the idea. Let's see what happens next before we rush to judgement.

[razorback9926]

As a subscriber of both, I'm excited about this merger. I'll be able to get content of both without having to pay for two separate subscriptions. The price of Sirius may go up a little, but if they price it too high, they'll lose my business. Both services were bleeding red and would have gone under. This merger still might not save Sirius, no company can bleed red forever without calling it a day.

[blizzardboy]

[wpavlik2]

As a subscriber of both as well, as a stockholder of Sirius, I'm releived this wait is over. I'm also angry that this deal took so long to get through. When you look at how quickly other large mergers were passed, this is just a shame.
I'm looking forward getting to listen to 1st wave on my XM unit in our GM vehicle (As well as Howard and his antics)
It will also be nice to have to pay one subscription and have an "add on" at 1/2 price versus 2 full price subscriptions.
The NAB (National Association Broadcasters) have been shaking in their boots over this merger since they saw their advertising revenues drop to near nothing. That is the real holdup. Delay it long enough, and the companies will go broke and they can get back to making us listen to their stupid yacking ads and no choice in music.

[bradleyw801]

Sirius should have ditched that clown Howard Stern to bring down their costs. He should be paying them to annoy the country, not the other way around. I wouldn't miss losing howard stern.

As far as a monopoly, you can argue that it technically is, however it definately doesn't have a stranglehold on the market. A monopoly is only a negative thing if it gives a company unchecked power over consumers. This merger doesn't.

This merger should have passed years ago. Anyone who is concerned about price increases, or losing content, or customer service is a fool. These providers know that if the price jumps, so will we. And they can afford to lose a few jazz fusion channels without anyone batting an eye.

[ptb6744]

You are absoultely right! Id much rather pay for this service (which I do, I have been a subscriber to Sirius for the last 3 years) then listen to the garbage of regular radio.

[martin_c_e]

Right On! I do not subscribe to either XM or Sirius, nor do I listen to regular radio. Thanks to the existence of satellite radio, I have had HD2 & HD3 stations which are superb. Finally, the FCC made the right decision. If satellite radio fails, the NAB will most likely end HD2 and HD3 stations. Here's to success for the merged company!

[blizzardboy]

bradleyw801 you have a right to your opinion but I think that not many people would argue that if Sirius never aquired Howard Stern we probably would not be talking merger today. Sirius was trailing XM big time as far as subscribers go. Look at what has changed from January 2006 to today. Like him or hate him he made a huge impact to the satellite business since coming aboard.

[kannuc]

XM's programming so terrible that I've given up listening to my favorite blues music. Most of the crap they play is by obscure newer artists; reminds me of the late 50's where DJ's were taking payola to play records. My guess is that's still going on. On the 60's and 70's channel, you would think the British Invasion never happened and that, instead, music in that era was mainly disco. If it dosen't get better with the merger, they've lost me. Hearing Stern say the F word won't cut it for me

[GMUHistorian]

I am also extremely happy with this merger. I've been holding off on getting either Sirius or XM because there was content on both that I wanted. In my opinion, this is what has held back, and given their stock prices previously, would have ultimately killed, satellite radio. Within a year if those interoperable radios are released, or I only need one subscription, I'll definitely get satellite radio and I think many consumers will be the same. The idea of paying two subscription prices just IMO turned a lot of people off. Now this merger means they will likely not have to do that and can feel free to invest in the technology.

As for it being a monopoly, I could care less. If I don't want to listen to the content, I can listen to my local stations, use an iPOD, or even listen to some radio stations online. Although my local stations are rather monopolistic as well, but the NAB doesn't raise a finger about those. I've got *one* choice for sports radio in Washington, DC. It's a station that's simulcast over 3-4 others. Once I can get an interoperable radio I will have the choice of ESPN, Fox Sports a baseball channel and with the addition of Sirius content, a lot of collegiate football events that aren't available on XM.

[lobo65]

What sucks is that I thought I read that we will have to get new receivers if we want to receive content from either service that we weren't already getting. I have XM. Am I going to have to buy a "new" combo receiver to get the former Sirius channels?

[GameOvR]

Ive been a subscriber for 3 years and Ill tell you what. I dont care about any future subscription rate raises. Free radio has gone completely to the birds and will never go back. I subscribe to Sirius and I listen to the Howard channels, the classic rock stations and the 80s station. Even though thats all I listen to, Im happy paying for the service of uncensored and music channel commercial free radio! Whoever is defending free radio here, please identify your job description with the NAB!

[smleeth]

I have been a staunch supporter of XM since the technology was first announced back in the 90's. I have 4 subscriptions and persuaded my family to purchase stock in the early years (of which they lost their *****).

However, this merger might be the only reason I'll keep my subs. I am a fan of musical diversity and choice, but I am also a fan of quality. That is the department in which XM has been severely lacking as time has passed. The compression issue has become plain ridiculous.

Maybe with the two companies joining forces we'll gain back some of the sonic quality that we enjoyed in years past. If not, it's back to CD's, internet radio and 90.3FM here in Seattle...

[nicmart]

I once subscribed to XM, but quit after a couple of months. I couldn't stand the radio-style DJs and there wasn't enough programming that attracted me. Now I have a three month trial with my new car, and the first thing I notice is that the audio quality is terrible. Talk channels sound like 32-bit rips. And they still have the jabbering DJs. Even with the merger I doubt that the resulting company offers enough quality and variety to make a profit. When my trial is over I won't subscribe.

[nicmart]

The only monopolies that harm consumers are those fostered by government. Occupational licensing has created a huge variety of cartels, including physicians and attorneys, but the antitrust loving leftists ignore them. The main thrust of antitrust fetishists is more more anti-business than pro-consumer. In fact, antitrust laws are not pro-consumer at all. They are yet another way for members of the legal cartel to waddle up to the trough.