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3/24/2008
BREAKING NEWS: DOJ approves XM-Sirius merger

The U.S. Justice Department has signed off on a proposed merger of XM Satellite Radio and Sirius, the two largest satellite radio companies.

Justice Department officials announced the completion of an investigation on Monday, March 24, saying the proposed merger would not reduce competition.

“After a careful and thorough review of the proposed transaction, the division concluded that the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers,” officials stated in a press release.

Management from both companies agreed to a merger in February 2007 subject to federal approval. In February 2008, officials with both companies extended their internal deadline to merge to May 1.

Competition between the two is limited, Justice Department officials said. Competition mainly concerns other sources such as traditional AM/FM radio, HD Radio, MP3 players, iPods and wireless telephones.

XM and Sirius both provide news, sports, music, entertainment and talk programming, including programs geared for truckers.

“Land Line Now” is among the programs truckers listen to on XM Satellite Radio’s “Open Road Channel” 171.

The merger will continue to affect subscribers who would like to have both signals for several years.

According to Justice Department officials, existing equipment for either XM or Sirius cannot be modified to receive the other provider’s service. Officials say an interoperable device that receives both signals is still years in the making.

“The need for equipment customized to each network means that in order to switch from XM to Sirius, or vice versa, a subscriber would have to purchase new equipment designed for the other service,” department officials said.

Agreements with respective vehicle manufacturers will remain intact until at least 2012, officials stated.

The Justice Department examined whether the companies could pass along certain efficiencies to the consumer to avoid increases in cost.

“For example, the merger is likely to allow the parties to consolidate development, production and distribution efforts on a single line of radios and thereby eliminate duplicative costs and realize economies of scale. These efficiencies alone likely would be sufficient to undermine an inference of competitive harm,” department officials stated.

Click here to read the U.S. Justice Department press release.

The merger must still be approved by the Federal Communications Commission.

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