FCC Approval Ends Long Wait for Sirius XM Radio Merger
More than seventeen months have passed since the official announcement was made on 19 February 2007 to shareholders of Sirius Satellite Radio and XM Satellite Radio that the two companies would be merging, and the Federal Communications Commission (FCC) has finally approved the merger, with the New York City based merged company to trade under the name of Sirius XM Radio, Inc. This is no doubt welcome news to all who have been involved in the lengthy and complex merger/buy-out process.
The two companies filed the official “Consolidated Application for Authority to Transfer Control” at the FCC on 20 March 2007. On 8 June 2007, the FCC publicly confirmed that it had accepted the application and marked that date as the beginning of its six month review period. The FCC also set 9 July 2007 as the deadline for comments or petitions relating to the merger, with 24 July 2007 being the deadline for responses or oppositions.
At a meeting held on 13 November 2007, shareholders of Sirius Satellite Radio gave their approval to the $5 billion acquisition of XM Satellite Radio Holdings. However, the merger still needed to be approved by the FCC and the United States Department of Justice Antitrust Division. On 24 March 2008 the Antitrust Division concluded its investigation, being satisfied that the merger would not be detrimental to consumers or competition.
The main obstacle for the merger lay with approval from the FCC, which had only granted the two satellite radio licenses in 1997, stipulating at the time that, in order to ensure fair competition in the satellite radio market, one license holder would not be permitted to gain control of the other. However, despite opposition from a number of consumer groups, the land-based radio industry and various Congress members, in June 2008 the FCC agreed to the merger under certain conditions. These conditions include having twenty-four of the channels devoted to non-commercial and minority programming; a price freeze for consumers for a period of three years; and the offer of a la carte channel subscriptions featuring the best of Sirius and XM packages to be made available to all subscribers.
Now that the FCC has approved the merger (with a 3 to 2 vote), there are many financial and logistical challenges ahead for Sirius XM Radio (NASDAQ: SIRI) under the leadership of CEO Mel Karmazin (ex-Sirius) and Chairman Gary Parsons (ex-XM). No doubt priority will be given to keeping the more than 18.5 million Sirius and XM subscribers satisfied.