
In case you weren’t paying attention (and you probably weren’t), XM and Sirius executives have spent the last couple years consistently denying rumors that the two satellite radio services are secretly in love. According to a Gizmodo article from June of 2006:
[Sirius Radio Chief Executive, Mel] Karmazin continues to say that Sirius is definitely not up for sale and that a merger probably wouldn’t work out. He was quoted saying that the current Sirius business plan does not include making any kind of deals and he also said that he would be gone if any kind of merger happened.
Typical posturing. These celebrity couples always deny their romances even when everybody knows what they’re up to - even after the paparazzi has caught them making out at Hyde and holding hands on their vacation together in Cabo.
Then, on January 11th of this year, the two services announced that they would, in fact, hook up, promising a celebrity couple the likes of which we haven’t seen since Britney and K-Fed. They made the announcement at the North American Auto Show, much to the disbelief of nearly everyone “in the know.”
Not surprisingly, the grouchy old FCC responded within the week, saying that the love affair wasn’t happening - as it would violate federal antitrust laws. It would also violate specific FCC rules that were put in place when the two services first started. FCC chairman, Kevin Martin, said on January 17th in no uncertain terms:
FCC regulations created when the satellite radio service was conceived more than a decade ago clearly state that “two satellite radio operators [must] remain in place,”
An article in MediaWeek added:
…he noted that there is “a prohibition on one entity owning both of those licenses” and he reminded reporters of how the commission rejected the proposal merger between the two satellite television companies to merge in the summer of 2004. In fact, that proposal was rejected by a pro-consolidation oriented panel of commissioners in less than 60 days, a world speed record in Washington regulatory terms.
Even Gizmodo gave up hope for the merger, saying:
After much speculation, it appears that the prophesized (sic) — and hoped for — union of XM and Sirius simply isn’t meant to be. At least, that’s what FCC Chairman Kevin Martin says, posturing that such a merger wouldn’t win approval under the FCC’s current rulebook, given that the regulations that brought both of them into business also forbid them from being owned by a single entity.
But today, flying in the face of every piece of news reporting, posturing and federal regulating, XM and Sirius threw caution to the wind and announced their engagement. They haven’t set a date yet, but both said they’d really love to have a fall wedding.
According to the official press release:
SIRIUS and XM to Combine in $13 Billion Merger of Equals - Provides Consumers with Enhanced Content, Greater Choices and Accelerated Technological Innovation - Enables Satellite Radio to Better Compete in Rapidly Evolving Audio Entertainment Industry - Extraordinary Value Creation for Shareholders - Mel Karmazin to Serve as Chief Executive Officer and Gary Parsons to Serve as Chairman of Combined Company
If you’re not a fan of poorly-constructed press release headlines, you can also get the joyous news from his side or her side.
And don’t worry about that nagging old FCC. Father of the groom-to-be, Karmazin says,
“We would not be announcing this if we did not think that we’d have approval.”
So there it is. It’s love. And you can’t fight love.
I’m still trying to decide how I feel about this thing. I have subscribed to both services: XM for about two years, and Sirius since Christmas. Both have great offerings, and in a lot of ways, they are very similar.
According to articles I’ve read, the costs involved in providing satellite radio are high for their respective owners, and the subscriber growth has been fairly slow. In many ways, the very competition that those FCC regulations are in place to protect is hurting both services. They’re constantly fighting rising operating expenses and battling each other for the same audience.
A merger makes sense for the two companies. They’d both be saving money, wouldn’t be undercutting each other for licensing rights and advertisers, and would be able to work cooperatively to provide a better experience for a (hopefully) growing subscriber base.
To me, the chance to have a unified service, likely with expanded programming and savings doesn’t sound like a bad thing. Maybe then I can get the stuff I like from Sirius with XM’s superior satellite antenna reception.
Obviously there are concerns about hardware, channels, subscriptions, and everything else. Do I have to buy another radio? Will I lose the channels I’ve come to love?
Who knows. Right now, I guess I’m optimistic. I’m a big fan of satellite radio, and I’ll be sticking with it regardless.
Oh, and I’ll tell you this: in my opinion, Xirius beats Brangelina any day of the week.
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*UPDATE: Read this article from Wired. It does a good job of putting the realities of this story in perspective.