The FCC announced it is "seeking comment " on the proposed merger between the only two satellite radio companies in existence. Am I the only one who wonders they are even bothering?
Based on recent decisions like the one in which the FTC contested the Whole Foods (WFMI) and Wild Oats (OATS) $560 million buyout, I cannot fathom a scenario in which the only two companies in an industry are allowed to form only one. While I feel the Whole Foods opposition is nonsensical, the fact there is opposition to it is what it is. The merger between XM (XMSR) and Sirius (SIRI), valued at $4.7 billion is currently being opposed by both consumer groups and the National Association of Broadcasters and really, I cannot find anyone who favors the merger except folks and shareholders of XM and Sirius.
For a little history we only need go back to the attempted Direct TV (DTV), Echostar (DISH) merger a few years ago. There we had two companies attempting to merge to create more competition against other pay TV companies (cable) like Time Warner (TWC) and Comcast (CMCSA). . The FCC opposed and squashed it because they said the merger would eliminate competition in rural areas and the same scenario holds true in this instance. Also hurting this attempt is that we have no pay radio competition at all for the combined entity to argue they need to merge to help combat in other areas. The profitability with the two companies is not due to lack of consumer interest, it is due to moves like giving Howard Stern hundreds of millions of dollars to essentially do what he did for for a fraction of the price on free radio. Heck, if they had just waited the guy probably would have pulled an Imus soon enough and got himself tossed off the air anyway, then they could have picked him up on the cheap. The only difference now is that without the specter of the FTC coming down on him at any minute, the cache and risk is gone and so all you have is a middle aged guy swearing on the radio, it's get boring after about 3 minutes. There is a reason he has not been in the news the last 2 years, nobody longer cares.
This attempt will be squashed and consumers will win in the long run. Short term, shareholders will get hit.