Justice Department Approves XM-Sirius Merger, Effect on Canada Uncertain

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The satellite radio merger between XM and Sirius is one step closer: the U.S. Department of Justice gave their thumbs-up to the proposed $5 billion satellite radio marriage. The Federal Communications Commission still has to approve the deal.

Digital Journal —The Justice Department concluded an XM-Sirius merger would not reduce competition in the sat-radio industry, despite the fears of consumer groups. The statement explained: “Because customers must acquire equipment that is specialized to the satellite radio service to which they subscribe, and which cannot receive the other provider’s signal, there has never been significant competition for customers who have already subscribed to one or the other service.”

The Justice Department’s antitrust division said prices won’t rise in light of the merger, mainly because of competition from other sources such as MP3 players and high-definition radio. Consumers groups and broadcasters oppose the merger, saying the union would create a monopoly that would force up prices and reduce available programming.

Announced last year, an XM-Sirius merger would combine XM programs by Oprah Winfrey, Snoop Doog and Willie Nelson with offerings from Sirius, which include shows starring Howard Stern and Martha Stewart. Both companies are bleeding money, having been saddled with $2 billion debt in 2006 alone.

The FCC isn’t sure what it wants to do with this massive media marriage. Recently, FCC chairman Kevin Martin sounded unsure of his position, saying, “I've got the staff drafting various options. I haven't figured out what I think we should do on it yet.”

Also uncertain is the implication of the merger outside the U.S., particularly in Canada. In the Great White North, XM Canada is affiliated with the public company in the U.S. while Sirius is partially owned by CBC, the privately held Standard Radio and U.S.-based Sirius Satellite Radio. How would the merger affect Canadians subscribers from both companies?

Sirius Canada declined to comment to DigitalJournal.com at this time.

XM Canada said in a statement the Justice Department’s approval “will have no immediate impact on XM Canada's service offering to subscribers.”