FCC says no to satellite radio merger

FCC Chairman Kevin Martin has now ruled out the possibility of a merger …

One rumor that has resurfaced periodically over the past couple of years was dealt a fatal blow today. Federal Communications Commission Chairman Kevin Martin told reporters after an FCC meeting that the Commission would not approve a merger between satellite radio rivals Sirius and XM Radio. According to Bloomberg, Martin said that "there is a prohibition on one entity owning both of these business."

Most of the merger rumors have come directly or indirectly from Sirius CEO Mel Karmazin. In a November 2006 interview, Karmazin remarked that he would be open to a merger. "I have focused my entire career on shareholder value and wealth creation. Often mergers allow for that," said Karmazin. "I combined my radio company with CBS, and I combined CBS with Viacom."

At that time, we pointed out while that a merger would make sense financially—both companies have been hemorrhaging money from expensive programming agreements and satellite launches—it would have a hard time clearing regulatory hurdles. When the FCC initially licensed the two satellite radio companies in 1997, there was language in the licensing barring one from acquiring control of the other.

During a speech at last week's Consumer Electronics Show, Martin compared the satellite radio market to the satellite TV market. He suggested that the same barriers that thwarted an attempted 2002 merger between DIRECTV and DISH Network would come into play with Sirius and XM Radio.


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