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Sirius, XM Merge
The two satellite radio providers can't go it alone: XM and Sirius will merge as "equals," the press release says, with a combined value of $13b and net debt of $1.6b. The FCC chairman Kevin Martin has previously signaled that the existing licenses precluded this sort of merger. However, presented with a fait accompli and the potential for two spectacular bankruptcies, coupled with the robust competition of Internet radio, the future HD Radio challenges, and iPods--the FCC will likely give in, with conditions.
What this merger does is stop the crazy race to the bottom in which both companies bid huge premiums to obtain exclusive programming from the National Football League and Howard Stern. Future deals are much more likely to be made at market rates comparable to those provided on exclusive deals among terrestrial broadcasters.
The two firms combined have $1.5b in revenue (in 2006), and 14m subscribers, and it's unlikely there will be many overlaps between the two companies. It's not clear at all what programming will look like in a combined entity, in that it's possible receivers could be redesigned to handle all XM and all Sirius channels, with overlapping programming reduced, and more regional channels introduced.
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