FCC Finally Approves Sirius-XM Merger

The government regulatory debacle known as the Sirius-XM (SIRI) (XMSR) merger has officially ended as the Federal Communications Commission approved the deal after 17 months of deliberation (and lobbying from the National Association of Broadcasters).

According to the Washington Post and Wall Street Journal the FCC approved the deal in a 3-2 vote after Sirius and XM agreed to pay $19.7 million in fines (Techmeme).

The government took more time to approve this deal than the Exxon-Mobil (XOM) merger and basically every other deal it has thought about. Sirius and XM will have 18 million subscribers combined.

Disclosure: I’m a Sirius subscriber and listen to Howard Stern every morning so I’m not going to pretend to be objective here. But politics held this deal up and frankly it’s a government embarrassment. I also never got how Sirius and XM were a monopoly given that they compete (and lose) to Apple’s (AAPL) iPod and other music choices. Sure, Sirius and XM have a satellite radio monopoly, but it’s still a shack in an upscale audio entertainment neighborhood (Apple has the best house on the block). Zoom out a bit and you see a monopoly that’s basically meaningless.

In a statement, the NAB said that the FCC vote “comes as a disappointment.”

Now the deal is done the real work begins. Here’s what I really want to know:

• Can the combined companies really cut content costs after signing big deals with the NFL, MLB and Stern of course to set a precedent? Is the NFL really going to take less? How about Howard?
• Can the new company compete with the iPod?
• Can Sirius-XM recover the enthusiasm that waned following 17 months of red tape?
• Could Sirius have walked away from the deal and bought XM in bankruptcy?
• Will devices get all content from XM and Sirius and deliver live reception (I’m usually on foot not in the car) that actually works?
• Is the real distribution model for satellite radio really on the Web (that’s where I mostly listen)?
• When will someone create a satellite radio, MP3, AM/FM player? Confessional: I still listen to traditional radio of the AM variety for live news (Bloomberg mostly). Yes, it’s uncool, but when something happens in NYC–blackout, terrorist attack, falling crane off a building etc.–you’re light years ahead of the iPod carrying masses when you have live news from a trusty am radio. I’d rather know what’s going on than be trendy. The downside: I carry around too many audio devices.

Comments

[screamer:]

Nothing "uncool" about listening to a.m. for Bloomberg.

I love satellite for all the interference-free talk radio channels. I haven't listened to music in years. What I find amusing is that all of my friends are the same way, and that this demographic is completely overlooked. I'm beginning to wonder if too much emphasis is being put on music.

2008 Jul 27 09:34 AM

[User 219355:]

Maybe the new company should have a rolling local news channel in say alphabetical order

2008 Jul 27 09:45 AM

[Edster:]

Sirius and XMSR will do well together. Time will tell. I have great confidence in Mel who I am sure will do what is right should both satilite companies work to the benefit of the consumers as well as investors. Mel as a CEO has a proven track record. Patience is often rewarding and I hope the long wait for the FCC to finally approve the merger will prove both beneficial and rewarding to investors. I have confidence it will.

2008 Jul 27 10:18 AM

[Gregg:]

You've got to figure Sirius has had months and months to strategize and will be executing major programming moves immediately.

Here are the biggest issues in my mind -
> Getting on the Iphone with as many channels as possible. Great value add for subscribers and makes it attractive to new subs.
> Stern Factor - SIRI needs to get Howard on XM radios ASAP and not wait for the interoperable. The ad revenue is badly needed. Full disclosure - I've got a SKYfi2 in my office waiting!
> Holiday news - Both XM and SIRI have had devices lurking at the FCC. What can/can't these new radios do with the merger?
> Technogeeks - XM has the better tech in my opinion. Their signal is generally easier to pick up than SIRI and the XM mini-tuner and XM-ready devices have to be considered. Here's hoping they listen to the engineers at XM!! We need new news ASAP to get consumers excited.

Glorious day for Sat Radio fans. Can't wait to see where we stand 12mos from now.

2008 Jul 27 12:16 PM

[SIRIUSMENACE:]

Your questions should be answered by the evidence of 18 million loyal subscribers with an ever-increasing base. The service is dynamite and the content is rich. I agree this is not a monopoly and never was.
Many people spend a lot of time in cars. As an on-the-road salesperson, I can travel through 4 states and never lose a signal. IPODs do not offer the content on the go that SATRAD does.
I love it and trust that Mel Karmazan will continue to build content that attracts more and more listeners. These same questions were asked about cable TV and now it is ubiquitous.

2008 Jul 27 03:03 PM

[Mr. Stupid:]

I bet the new combined company will have atleast 25,000 subscribers before the end of 09. And that's a conservative estimate.

2008 Jul 27 04:30 PM

[PostItChild:]

Here's a humorous take on where all of this might be going -- somewhere down the line!

Future News: Google Acquires Sirius-XM
www.medianewsandviews....

2008 Jul 27 05:24 PM

[oregonduck:]

You kinda made a point. Its a "shack"--well--I liken it to cable--IPOD's cant play NFL games, NBA, College football, Bloomberg, CNN, opera--you get my drift. I have an Ipod, CD and Satellite--they all go together. Its not like one will get one or the other. Its more like sattelite will replace AM/FM. Why dont analyist get that??

2008 Jul 27 07:29 PM

[Rob L:]

Personally I'll never pay for music or even talk, and I think most people would agree. A 7% increase or whatever it was in retail sales isn't all that great. The 53% new car increase is misleading because I would believe most of those people won';t renew after the included subscription ends. The concept is definitely a loser,has been a loser, and will always be a loser.

2008 Jul 28 09:28 AM

[iTodd:]

Investors don't seem thrilled. SIRI is down today. I might have expected the stock to rebound a bit today but perhaps the approval was already priced into the $2/share price. Sad. Not much confidence from investors for satellite radio. I've got to wonder how things might have been different if the FCC had approved this merger a year ago.

2008 Jul 28 02:32 PM

[siriusly pi...:]

SIRI took a dump today. what the hell????

2008 Jul 28 07:34 PM

[Freep:]

@%@%$#$# Cramer compares SIRI to a $2.00 Lottery ticket. At the point...I'LL TAKE IT. $2.00 is looking pretty good right about now. We might taste $1.45 a share tomorrow. And why haven't they closed the damned deal yet? Sure I'm frustrated...I'M LOSING MY ASS HERE..so I feel entitled to vent a little. I haven't sold...in fact I bought today...but come on man...enough is enough. How can these companies be worth less combined than they were apart?

2008 Jul 28 07:51 PM