TUESDAY MARCH 25
It’s Getting Sirius

The $5 billion marriage of competing radio networks XM and Sirius has been blessed by the U.S. Justice Department, at long last bringing together the programming of Oprah Winfrey, Willie Nelson, Snoop Dogg, Howard Stern, Martha Stewart and National Public Radio…into one giant, unholy union. But will the FCC and consumer groups screw this one up?

March 2008

The Justice Department gave approval on Monday to the merger of two rival radio networks, XM and Sirius, a marriage that would create a de facto monopoly in satellite services now used by more than 17 million subscribers.

The proposed $5 billion merger, which was announced more than a year ago, must still be approved by the Federal Communications Commission. The merger is opposed by consumer groups and broadcasters who say it will force up prices and reduce the programming now available from the two competing systems.

The Justice Department’s antitrust division announced Monday that it approved the merger after determining that prices were not likely to rise, in part because of competition from other program sources, like high-definition radio as well as iPods and other MP3 players that can be connected to home or car audio systems. The deal, the agency said, was unlikely to hurt competition or consumers.

“In several important segments of their business, with or without the merger, the parties simply do not compete today and therefore the merger would not be eliminating any competition between them,” Thomas O. Barnett, assistant attorney general, said in announcing the decision.

In other segments of the market, XM and Sirius compete fiercely and, according to their balance sheets, unprofitably; both companies are saddled with debt.

A merger would bring together programming by Oprah Winfrey, Willie Nelson and Snoop Dogg, who have lucrative and exclusive contracts with XM, with offerings on Sirius, including Howard Stern, Martha Stewart and National Public Radio.

XM, which has about nine million subscribers, offers play-by-play from Major League Baseball games. Sirius, which has about 8.3 million subscribers, broadcasts live play-by-play games of the N.F.L. and N.B.A., as well as live Nascar races.

F.C.C. officials have offered conflicting signs on whether the commission would approve the merger.

The commission’s chairman, Kevin J. Martin, was quoted last week as saying that “I haven’t figured out what I think we should do on it yet.”

Mr. Martin is thought to support an important element of the deal — the creation of a so-called à la carte system of pricing, which would allow customers to choose among packages of programs instead of the full lineup that subscribers must now purchase.

The Justice Department’s announcement was welcomed in a joint statement by XM and Sirius, which said a merger would lead to “lower prices and increased programming choices.”

Continue reading at NYT.com

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