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Everyone has been talking about a possible merger between Sirius and XM for the past two weeks. The discussions were spurred by comments from management on both sides of the story. The story has seemed to gain ground even though a single company is a very unlikely result.

Here are the top five reasons from Orbitcast on why a merger would never work:

1. The FCC – From a regulatory standpoint, it’s hard to say whether or not the FCC would approve such a merger. Here’s the single biggest defining question: Does the FCC consider satellite radio as part of a broader market for the distribution of music?
2. The Democrats – Historically in a Democratic-controlled Congress, major media mergers are looked upon less favorably. Democratic committee chairs are expected to call for increased antitrust scrutiny of mergers in certain sectors, including energy and telecommunications.
3. The NAB – If you think the National Association of Broadcasters opposed the satellite radio industry as a two separate entities, imagine how they would react if a merger was proposed?
4. The Technology – Both companies broadcast from satellites using the 2.3 Ghz S band, but the similarities stop there. Using different codecs, different encryption routines and different modulation techniques. Each receiver is unique to its respective provider.
5. Who Buys Who? – XM’s enterprise value is 20% smaller than Sirius’ is, but XM has a larger subscriber base and more OEM penetration. Both companies believe their individual strategy for growth is the “right” strategy.

There are so many more points on why the merger would never fly as well as a host of reasons why it could be the best thing to happen to satellite radio. Either way the likelihood of it working is extremely low.

Read the whole story [Orbitcast]

Written by Adam Berger for Gadgetell, 2006. |
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