Feeds

Sirius, XM resort to FCC-baiting merger

Oprah and Howard Stern in 'merger of equals'

Top 5 reasons to deploy VMware with Tegile

As we predicted on Friday, subscription satellite radio providers Sirius and XM have announced a plan to merge in the face of rapidly propagating entertainment delivery platforms.

The combined outfit would be worth about $13bn if the stock swap deal completes, as the two firms expect, by the end of this year. Whether the deal goes through or not, the inevitable antitrust investigation would make that timeframe seem optimistic.

The monopoly-creating plan values XM stock at around $18.40 per share. At time of writing, it had risen more than 12 per cent, but at $15.77 was still a way off the offer price, reflecting market doubts that the FCC will let this one slide. As it stands the regulatory regime for satellite radio licensing forbids the move.

As the buyer in this "merger of two equals", Sirius has had a more muted response from its investors. Sirius was trading up almost 7 per cent at $3.95, but still way short of this time last year, when shares were changing hands for nearer $6.

Terrestrial radio trade association the National Association of Broadcasters blasted the game-changing manouverings. Executive Vice President Dennis Wharton said: "When the FCC authorized satellite radio, it specifically found that the public would be served best by two competitive, nationwide systems. Now, with their stock prices at rock bottom and their business model in disarray because of profligate spending practices, they seek a government bailout to avoid competing in the marketplace."

Pot, meet kettle.

There is a glimmer of hope for the merger. Speculating on a possible tie-up FCC chairman Kevin Martin said recently: "The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices." Monopolies are not known for creating the conditions required to drive prices down though.

Rather than stifling such competition and dynamism in the industry, Sirius reckons a monopoly would "create a stronger platform for future innovation within the audio entertainment industry and will provide significant benefits to all constituencies".

Sirius CEO Mel Karmazin, who would hang on to the top spot at the combined provider, also hinted that the much-vaunted advertising-free dogma cold be dropped if the merger is approved, saying: "The combined company will be positioned to...drive increased advertising revenue and reduce expenses." Between them, Sirius and XM would bring $1.6bn in debt baggage to a nascent monopoly. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
Win a year’s supply of chocolate (no tech knowledge required)
Over £200 worth of the good stuff up for grabs
Facebook's Zuckerberg in EBOLA VIRUS FIGHT: Billionaire battles bug
US Centers for Disease Control and Prevention contacted as site supremo coughs up
Space exploration is just so lame. NEW APPS are mankind's future
We feel obliged to point out the headline statement is total, utter cobblers
Red Bull does NOT give you wings, $13.5m lawsuit says so
Website letting consumers claim $10 cash back crashes after stampede
Down-under record: Australian gets $140k for pussy
'Tiffany' closes deal - 'it's more common to offer your wife', says agent
Internet finally ready to replace answering machine cassette tape
It's a simple message and I'm leaving out the whistles and bells
Swiss wildlife park serves up furry residents to visitors
'It's ecological' says spokesman, now how would you like your Bambi done?
The iPAD launch BEFORE it happened: SPECULATIVE GUFF ahead of actual event
Nerve-shattering run-up to the pre-planned known event
STONER SHEEP get the MUNCHIES after feasting on £4k worth of cannabis plants
Baaaaaa! Fanny's Farm's woolly flock is high, maaaaaan
FedEx helps deliver THOUSANDS of spam messages DIRECT to its Blighty customers
Don't worry Wilson, I'll do all the paddling. You just hang on
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.