Rivals XM and Sirius to Merge

The Federal Communications Commission late Friday gave its nod to the marriage of two satellite radio operators XM Satellite Radio Inc. and smaller rival Sirius Satellite Inc. the approval paves way for 18 million subscribers being able to receive programming from both services.

Sirius Satellite Radio’s buyout of rival XM Satellite Radio Holdings would cost the former about $3.5 billion. The resultant merger would entail huge cost savings and would first profits for the blossoming industry.

XM Satellite Radio Holdings (XM) was founded in 1988 as American Mobile Radio Corporation and launched its satellite service on September 25, 2001.XM provides pay-for-service radio, analogous to cable television. Its service includes 73 different music channels, 39 news, sports, talk and entertainment channels, 21 regional traffic and weather channels and 23 play-by-play sports channels.

Sirius Satellite Radio is headquartered in New York City and has smaller studios in Los Angeles and Memphis, Sirius was officially launched on July 1, 2002 and currently provides 69 streams (channels) of music and 65 streams of sports, news and entertainment to listeners. Music streams on Sirius carry a wide variety of genres, broadcasting 24 hours daily, commercial-free.

The Federal Communications Commission voted 3 to 2 to approve the buyout after Republican commissioner Deborah Taylor Tate cast the tie-breaking vote to approve the merger. The companies have agreed to cough out $19.7 million to the federal Treasury to settle F.C.C. rule violations.

Two Democrats, Jonathan S. Adelstein and Michael J. Copps voted against the buyout. They were of the opinion that the satellite radio merger would hurt consumers and was not in the public interest.

To remove these apprehensions, the approval of the F.C.C came with other riders. Among others, conditions on the approval include a series of consumer protection conditions, including a three-year cap on prices and setting aside 8% of their channel capacity for minority and non-commercial programming.