February 19, 2007
FCC Could Block Sirius Merger With XM
Sirius (SIRI) and XM (XMSR) today announced that the companies would merge in a combination that would give each company's shareholders 50% of the new firm.
The merger has one huge hurdle, the FCC. And, the agency may have good reason to block the deal.
Competition between the two companies has almost certainly kept the monthly rate to subscribers at around $12. The mergered company would almost certainly raise rates to increase revenue and try to pay down the huge debt of the companies. It is one of the reasons that the federal goverment resisted newspaper mergers for so long.
The two companies would have to make a case that they would not survive without the merger.
Douglas A. McIntyre