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Sirius XM Merger: Has the Battle Just Begun?

Tuesday, July 26th, 2011

As of summer 2008, the merger of SIRIUS and XM has been approved by the U.S. Department of Justice. All that has to pass now is the FCC approval, which will then make the merger official. Experts are stating that the merger was all but official for the last year and a half, especially considering that it was questionable if the medium could sustain two healthy competitors. After all, since much of the programming of XM and SIRIUS complements each other, theoretically the two networks could have KO’d each other out of terrestrial radio’s league. Now both companies, standing united as one, are focusing on competing against the real “villain” in this scenario: terrestrial radio.The same terrestrial radio that has continually fined and suspended SIRIUS and XM’s most prolific entertainers like Howard Stern and Opie and Anthony.

The story is certainly a poetic one, particularly if satellite radio were to overpower traditional radio in the coming years. You may wonder how likely that scenario really is. Currently terrestrial radio is a monster, a Godzilla compared to two relatively small firms in XM and SIRIUS.

Some believe that the merger is not yet a threat to terrestrial radio, as so much it is a guarantee that satellite radio will continue to grow and stabilize as a true competitor. The stock market currently lists Sirius shares at $2.80 (as of May 2008) and XM Radio shares at $11.80. The Justice Department, who approved of the merger on March 24, 2008, stated that the agreement between satellite radio companies would not affect the “existing radio sector.”The combined audience of XM and SIRIUS would amount to 17 million listeners. If you are a fan of either XM or SIRIUS, and before now have never considered the other network, then the merger means good news. Company heads announced that existing customers of both XM and SIRIUS would continue to pay for their service but would receive select programming from both services on either platform within half a year of the merger’s finalizing.

What if the customer didn’t want to choose, nor accept only highlights? Would he or she have to subscribe to both services? Not necessarily. The companies plan to release an interoperable receiver in the near future, which will provide listeners the right to listen to all satellite radio programming options from both stations. They would also be allowed to pick a select number of favorite stations from both networks for their subscription. Interestingly, such a receiver has existed all along, but until now was not deemed suitable for the public because of FCC requirements. However, radio times have changed drastically with the merger and the need of such a receiver will continue to increase.

Another concern for potential growth is in the satellite radio-new automobile market. Major companies have been stocking their new cars with satellite radio receivers and offering temporary free subscriptions. However, the question remains whether new car owners will feel compelled to re-subscribe after the term ends.In the coming years, satellite radio will be competing with terrestrial radio, as well as HD radio, WiMAX Mobile Broadcasting and Internet Radio (powered by iPods). Though XM and SIRIUS have called a truce, the battle has just begun in the radio market.

To see the whole story in the movie RADIO WARS.