Sirius and XM Satellite Merger


Sirius and XM Satellite Merger

On February 19th, 2007 Sirius and XM, the US’s two providers of terrestrial satellite radio, announced plans to merge into a single service. But what is the story behind this attempted merger and how will if affect you, if you consumer?

XM’s satellite radio service launched in September of 2001, funded by its parent company American Mobile Satellite Corp, which was founded in 1988. It has become the leading satellite radio service in the country with over 7.6 million subscribers by 2006

Sirius was founded in 1990 but, like XM Satellite, it didn’t actually launch its satellite radio service until many years later. Although initially lagging behind XM in terms of subscriber base, Sirius’s strong programming lineup has gained it over 5 million subscribers, making the gap between it and XM far smaller.

XM Satellite Radio

How would a Sirius and XM Satellite Merger affect subscribers?

Sirius has stated that all existing Sirius and XM subscription plans would be would be honored by the new

company.

Currently, receivers from Sirius and XM radios are not compatible. Sirius and XM have stated that both services would continue to broadcast independently so current customers can still use their old equipment and are able to purchase an additional radio if they want to receive the remaining stations. New radios with the ability to receive both Sirius and XM stations would likely be offered.

A merger of XM and Sirius satellite radio would reduce operating and licensing costs would most likely increase the variety of stations and programming available to subscribers. A merger would also allow the new company to put more money and effort into developing new products.

Will the government allow Sirius and XM Satellite to merge?

Sirius and XM have publicly declared their desire to merge, but permission must be obtained from numerous government agencies before the merger can take place. The government's concern is that the merger would create a monopoly. Although they are slowly beginning to see profitability, both XM and Sirius have been losing money for a long time and have been telling government agencies that they are now facing competition from other forms of portable audio such as MP3 players, which did not exist when they began offering their services.

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