Sirius and XM, the country's only two satellite radio companies, are seeking government permission to merge.
The proposed deal, which was announced on February 20, 2007, requires the approval of the Justice Department and the Federal Communications Commission, as well as Sirius and XM shareholders. The companies have said they would like to complete the merger by the end of 2007.
The deal has been valued at roughly $4.6 billion and would create a single company with more than 13 million paid subscribers.
Companies Have Never Made a Profit
Neither company has made a profit since being authorized by the FCC to create their national satellite radio networks in 1997, although their losses have narrowed in recent years. Those continuing losses are one of the primary reasons cited by company officials seeking approval of the deal.
The companies are relatively immune from FCC content restrictions because they do not utilize the public airwaves like traditional broadcasters. The companies have paid untold millions of dollars to hire controversial radio personalities such as Howard Stern and Opie and Anthony and ink exclusive broadcast deals with the National Football League, Major League Baseball and Nascar stock car racing.
Consumer and Broadcast Groups Oppose Deal
Consumer groups -- including Consumers Union -- are opposed to the merger because it will create a nationwide monopoly in the satellite radio market. Service and equipment prices would almost certainly jump following a merger since there would no longer be any competition.
Some industry groups, such as the National Association of Broadcasters, are also strongly opposed to the merger, arguing the merged company would hurt consumers, broadcasters and local communities.
Companies Say Deal Won't Create Monopoly
XM and Sirius contend the merger would not create a monopoly because their services compete with a broad array of audio entertainment options, ranging from Internet radio to traditional radio broadcasters to Apple I-Pods.
The Justice Department and the FCC have begun reviewing the proposed merger, but it remains unclear when the agencies will take action. There have been several congressional hearing of the proposed merger and more are expected.
To learn more about the proposed Sirius/XM merger, click on the links below.