XM becoming very Sirius about satellite radio
By George Gardner
The rumors dated from last year to now were true; XM Radio has announced that it will be merging with Sirius Satellite Radio to form the premier digital audio service. Goodbye competition, hello price increase.
In a letter from XM, the company states: “The merger will create a satellite radio company that will provide consumers across the country with more and better premium radio programming. The combined company will be able to compete better in what has become a very complex and dynamic entertainment market.”
It’s more like an exclusive entertainment market. This morning, XM’s stock shot up nearly 13% with investors knowing where the future is heading; that’s right, a company that will surely monopolize on satellite radio.
XM Radio states that users of either system will be able to access content from both Sirius and XM. Where today, exclusive contracts mean you had to choose between baseball and football or Oprah and Martha Stewart.
The merger is expected to be completed later in the year, or early 2008. “Between today and the merger date, as well as during the period immediately after the merger date, all of your services will remain the same,” noted XM Radio, “The channel lineup, the customer service number, the great music technology, and the XM Radio web site will all remain unchanged and there will be no disruption to service.”
Sirius Satellite Radio is buying XM for roughly $4.6 billion in stock, making the two a $13 billion dollar entity. There are also many rumors that the 2 different receivers will not be compatible; however, XM states that the programming will be available for both receivers.
“When the FCC authorized satellite radio, it specifically found that the public would be served best by two competitive, nationwide systems,” said Dennis Wharton, evp at the National Association of Broadcasters, and noted that he would be shocked if federal regulators permitted a merger of XM and Sirius.
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