Sirius XM Merger

CNET

Updated at 4:45 p.m. PDT to clarify that portable receivers are capable of receiving live program signals.

The marriage of satellite radio providers Sirius and XM has finally received the blessing of the Federal Communications Commission on Friday. Now we can all finally get the game we want.

For many prospective customers, a key sticking point was the different selections of sports programming offered exclusively by each provider. A few years back, I wanted to make a present of a Sirius subscription to a friend who spends a lot of time driving around Northern California, especially in places that don’t get AM/FM signals. After sampling XM and Sirius’ music selections, I knew that she would enjoy the Sirius offerings over the XM offerings. But XM broadcasts more games of the sports she enjoyed–just not all of them. There really wasn’t a clear winner. So, to keep from saddling her with the wrong or incomplete service, I opted against the gift. Basically, the lack of a comprehensive offering cost the industry a customer.

I suspect that this was a dilemma faced by many listeners who were in search of more than their local radio stations could offer. But the merger means that listeners will be able to choose from a menu to add programming a la carte. For subscribers, this is a big win in programming. You can also bet that the prospect of replacing existing receivers will irritate early adopters.

Critics, however, will tell you that the merger will result in a monopoly. While the elimination of immediate industry competition will create a de facto monopoly, satellite radio is not the only source of music, talk, or sports broadcasting available to consumers. People are getting their music from many sources today. Besides satellite radio, people are finding their favorite tunes on Internet radio, MP3 players, music-playing cell phones and even traditional terrestrial radio.

To tell the truth, I don’t listen to terrestrial radio, or traditional free radio, much anymore, unless there is a game I can’t get on television. Indeed, “free radio” offers one of the more exciting and attractive music options in the form of HD radio. Unfortunately, some four years after HD radio hit airwaves, consumers have not embraced the new format, which ultimately suffers in comparison with satellite radio because of its limited range. If I weren’t so pleased with Sirius’ music programming and the fact that it’s offered as part of my Dish subscription, I would probably spring for an HD receiver to plug into my A/V home receiver. But I keep waiting for an affordable A/V receiver to come on the market that has HD radio built in as part of the tuner. When that happens, expect home satellite subscriptions to wane a little.

(Disclosure: I listen to music-only Sirius at home via Dish Network and a complete subscription in my wife’s car. The only financial interest I have in either company comes in the form of monthly subscription bills.)

You might think that the satellite industry has the upper hand in broadcasting. But while we’re on the topic of things we’re waiting for, let’s look at some of the things the satellite industry can improve. While Sirius now touts portable units as being capable of receiving live signals, many users complain of spotty or poor reception while on the go. Also, while traffic and weather reports for a few metropolitan areas is great, satellite radio can’t provide the same content as local news radio stations, so it would be nice have a portable unit that also gets AM/FM radio stations.

As a prerequisite for FCC approval, the companies agreed to freeze subscription rates for three years. If they try to jack the prices on consumers, expect consumers to change the dial, especially with the wide variety of options that are available to consumers today.

Justice Department gives thumbs up to satellite radio merger more than one year after it was first announced.

March 24, 2008: 4:21 PM EDT

In its decision, the Department of Justice determined that an XM-Sirius merger was not anti-competitive. The Justice Department argued that other media companies such as Clear Channel (CCU, Fortune 500), CBS (CBS, Fortune 500), or even Apple (AAPL, Fortune 500) with its iTunes software and iPod music player served as alternate options for music and media customers.

The Department of Justice did not place any conditions on the merger.

“Since we determined that there was no competition between the companies, we did not need to set any conditions as such,” said Assistant Attorney General Thomas Barnett during a conference call with reporters Monday afternoon.

But the Federal Communications Commission must also approve the deal. The FCC has yet to make a decision on the merger and it could decide to place conditions on the deal. A spokesperson for the FCC was not immediately available for comment.

Since Sirius and XM are still awaiting approval from the FCC, it is unclear exactly what a merger would mean for consumers. Both companies charge their customers a $12.95 per month subscription fee for their most basic packages. Some have feared that if Sirius and XM are allowed to merge, the two companies would raise the monthly price.

However, the companies said last year that they would be willing to offer a so-called “a la carte” price plan where consumers could pick certain packages for less money.

The merger would combine the nation’s only two satellite radio companies and create a company with about 14 million subscribers. It would bring together Sirius’ most well-known content, including shock jock Stern and National Football League games with XM’s Major League Baseball as well as programming from Oprah Winfrey.

Currently, subscribers for either Sirius or XM can only receive broadcasts from one of the two services with their satellite radios. But in a statement Monday, XM reiterated that radios owned by its current subscribers would not need to be replaced in order to continue receiving programming.