FCC Chairman Says Rules Ban Satellite Radio Merger

Wednesday, January 17, 2007 at 5:56 PM
Tags: 2, XM

Satellite RadioGee, who saw this coming? The FCC Chairman today indicated that Sirius and XM Satellite Radio wouldn't win approval of a merger under current U.S. Federal Communications Commission rules.

FCC Chairman Kevin Martin told reporters during a news conference that "there's a prohibition on one entity owning both of those licenses." He is of course talking about the key Safeguard established by the FCC in March 1997 that dictated the policies for the new satellite radio services.

The comments made by Martin sent shares of both companies tumbling. XMSR closed down by 9.86% and Sirius down 6.99% today. And for those who believe that there's still a possibility for the FCC to change the rules, based on satellite radio being considered as part of a "greater" marketplace, Satellite Radio TechWorld has insightfully pointed out that the FCC already considered this under the current rules (emphasis added):

77. Although spectrum constraints limit us to licensing just two satellite DARS systems at this time, our licensing approach nonetheless provides the opportunity for a competitive DARS service. Our goal is to create as competitive a market structure as possible, while permitting each DARS provider to offer sufficient channels for a viable service. In the Notice, we pointed out that "satellite DARS will face competition from terrestrial radio services, CD players in automobiles and homes, and audio services delivered as part of cable and satellite services," and asked whether these delivery media, coupled with fewer than four DARS providers, could ensure an effectively competitive audio services market.

PDF View the FCC Report & Order (PDF) that details the rules and policies set for satellite radio. It's not necessarily the most exciting read in the world, but at least it will answer any regulatory questions you might have over the possibility of a merger. I'm surprised it's actually taken this long to come out with this.

So with that out of the way, what ever will we talk about now?

 

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Comments

Good. Both stocks will take a hit, but the subs will not have to worry about a merger killing off their favorite channels/programming style. Now if we could only force both companies to dump the huge waste of bandwidth called video...

Posted by: History Guy ? | January 17, 2007 8:01 PM

Dead end for sat radio? Sub growth will increase over the next years, but i feel even at Xmas time next year the hype wont be big like the previous years. Word of mouth and vehicle subs are their biggest oppurtunites.

Still look forward to them making money in 2010...but for now maybe they should rethink strategies.

Posted by: Dave | January 17, 2007 8:45 PM

Maybe further downward selling trends for both companies?
No future signs of reaching profits?
Continued pressure to have to pay more for music being played?

I hate being a downer, but I think patience is going to run thin on these companies to turn it around now. Good ideas losing money only remain good ideas as long as those backing are willing to wait. I don't think the goodwill is going to last much longer.

Posted by: Jeff H | January 17, 2007 9:18 PM

Ain't that the truth. . . . .

Posted by: JimG | January 17, 2007 9:37 PM

What if the two countries were operated in another country and merged, but still sold the product to a US audience? Would that work?

Posted by: Jim ? | January 17, 2007 10:04 PM

Thankfully. Finally put this whole merger thing to rest.

Posted by: Anonymous Coward | January 17, 2007 10:45 PM

I would say no because there would still be another FCC license involved.

Posted by: Another Thought | January 18, 2007 7:47 AM

i would belive their products would still need to be cert by the FCC in order to be sold in the US...so they would get you anyway.


As for the merger i dont see the problem here with all the FREE stuff out there, not like this product can't be found for FREE, Internet, HD, ECt...

But hey lets let ATT buy more companies, LET comcast take over more cable companies....Clear Channel...Ect. LOL LOL

Posted by: PNess ? | January 18, 2007 8:17 AM

It's still going to happen. Don't underestimate Mel who has known these obstacles all along.

Thing big. Live Bigger.

Posted by: Pockpie Hates War | January 18, 2007 8:52 AM

and the comment"as the law stands now"
the law could be changed and then....

Posted by: gary | January 18, 2007 12:01 PM

I hope fans and the FCC consider that 1/2 a loaf is better than none....and none is where we're heading.

I personally couldn't think of anything better than ONE vibrant company that offered the best programing of the COMBINED channels, at a conceivably lower price attributed to savings.

Those that oppose are either dreamers or foolish. Change the ruling FCC. The SATRAD world would be a much better place.

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