Sirius and XM Merger

Sirius, XM merger approved

In one of the most drawn-out mergers in U.S. history, Sirius acquired XM on July 29, 2008, creating Sirius XM Satellite Radio, with 18.5 million subscribers. Neither company has ever made a profit, and each argued that they likely would not if they had to continue competing for subscribers. Both companies have penned expensive talent contracts, the highest profile deals including Sirius' five-year, $500 million contract with Howard Stern and $220 million for exclusive rights to NFL games. XM has signed $650 million for an eleven-year deal with Major League Baseball and $55 million for three years with Oprah Winfrey.

There were a lot of hurdles that had to be cleared for before this merger was finally approved. For example, the Federal Communications Commission (FCC) needed to be satisfied that there was sufficient competition from other sources, such as terrestrial radio, Internet radio and music streaming. Furthermore, despite the two companies' combined debt, they had to demonstrate that the merger would be beneficial for consumers, as well as provide better choices and better prices. The companies also had to overcome strong opposition from some industry groups, such as the National Association of Broadcasters (NAB). The companies argued that the merger was good for consumers because it would translate into savings and more selection for subscribers.

In the end, the FCC approved the merger, provided Sirius and XM agree to certain stipulations: The two services would offer à la carte programming and "best of" programming, along with low-priced plans and a three-year price freeze. They would also encourage the development of third-party products and interoperable receivers that can access both services, and dedicate 24 channels to noncommercial and minority programming.