Green light for satellite-radio merger of Sirius, XMMarch 25th, 2008 - 1:35 pm ICT by admin
Washington, March 25 (DPA) After a year of consideration, the US government has given its blessing to the merger of Sirius Satellite Radio Inc and XM Satellite Radio Holdings Inc, the two money-losing rivals in the US satellite radio market. The US Department of Justice said even after a merger, the joint firm would face major challenges from rapidly changing communications technology.
The two companies announced a $4.6-billion stock swap merger last year in the hope of keeping their heads above water, but they faced stiff review from government anti-trust regulators over the deal, which was described as a merger of equals.
Final approval was still pending from the Federal Communications Commission.
The US Department of Justice said that after “careful and thorough review” it did not appear the proposed merger would “substantially lessen competition, and that the transaction therefore is not likely to harm consumers”.
In apparent reference to the losses the two firms have faced over the past seven or eight years, justice officials said it did not seem the merger would result in a drastic price increase because of the stiff competition from other technologies.
The industry’s only paid-subscription radio firms, Sirius and XM together lost $7 billion over eight years leading up to their merger announcement in February 2007. Both firms went on expensive buying sprees of top radio attractions in their attempts to lure subscribers.
Under the agreement, Sirius was to buy XM for $4.57 billion in stock.
To boost clientele, the two companies have sealed long-term agreements with all of the major auto manufacturers to install their radios in new cars. The equipment is not interchangeable between the two companies.
The Department of Justice said it anticipated that satellite radio would be substantially challenged over the next several years by mobile broadband Internet devices.
Tags: auto manufacturers, federal communications commission, final approval, internet devices, justice officials, major auto, merger announcement, radio market, satellite radio merger, sirius satellite radio, sirius satellite radio inc, sprees, stiff competition, stock swap, term agreements, top radio, us department of justice, xm satellite radio, xm satellite radio holdings, xm satellite radio holdings inc