[Infowarrior] - Justice Dept. Approves XM-Sirius Merger

[Richard Forno]

Justice Dept. Approves XM-Sirius Merger

By JOHN DUNBAR
The Associated Press
Monday, March 24, 2008; 5:07 PM

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/24/AR2008032401
645_pf.html

WASHINGTON -- The Justice Department on Monday approved Sirius Satellite
Radio Inc.'s proposed $5 billion buyout of rival XM Satellite Radio Holdings
Inc., saying the deal was unlikely to hurt competition or consumers.

The transaction was approved without conditions, despite opposition from
consumer groups and an intense lobbying campaign by the land-based radio
industry.

The combination still requires approval from the Federal Communications
Commission, which prohibited a merger when it first granted satellite radio
operating licenses in 1997.

The Justice Department, in a statement explaining its decision, said the
combination of the companies won't hurt competition because the companies
are not competing today. Customers must buy equipment that is exclusive to
either XM or Sirius, and subscribers rarely switch providers.

"People just don't do that," Assistant Attorney General Thomas Barnett said
in a conference call with reporters.

The government also appeared to endorse a central argument the companies
used in pushing for their merger: that ample competition is provided by
other forms of audio entertainment, including "high-definition" radio,
Internet-based radio stations and even devices like Apple Inc.'s iPod.

"The likely evolution of technology in the future, including the expected
introduction in the next several years of mobile broadband Internet devices,
made it even more unlikely that the transaction would harm consumers in the
longer term," the Justice Department said.

The buyout received shareholder approval in November. The companies said the
merger will save hundreds of millions of dollars in operating costs _
savings that will ultimately benefit their customers. The Justice Department
also noted that argument in its approval.

The FCC had no comment on the decision Monday. In the past, FCC Chairman
Kevin Martin has said any approval faced a "high hurdle."

Martin said last week that agency staff was "drafting various options" in
preparation for a final recommendation. The five-member commission could
vote against the deal, approve it or approve it with conditions. The agency
could require the companies to freeze prices or make part of their satellite
spectrum available for public-interest obligations.

Both XM and Sirius declined to comment on the decision on Monday.

Sen. Herb Kohl, D-Wis., chairman of the Senate Judiciary Committee's
subcommittee on antitrust, said in a statement that the merger would create
a satellite radio monopoly and asked the FCC to block it.

"We are particularly disturbed by this decision, given the Justice
Department's record in recent years of failing to oppose numerous mergers
which reduced competition in key industries, resulting in the Justice
Department not bringing a single contested merger case in nearly four
years," he said.

The companies have pledged that the combined firm will offer listeners more
pricing options and greater choice and flexibility in the channel lineups
they receive. If the deal is approved, the companies have said they would
offer pricing plans ranging from $6.99 per month, for 50 channels offered by
one service, up to $16.99 a month, where subscribers would keep their
existing service plus choose channels offered by the other service.

Despite the consumer-friendly promises, most consumer groups have opposed
the proposed merger.

"If this is what our competition cops do, we might as well close shop and
save taxpayers a few hundred million dollars because they're not doing their
jobs," said Gene Kimmelman, the Washington lobbyist for Consumers Union,
nonprofit publisher of Consumer Reports magazine.

Shares of both companies rose following the news. XM Satellite shares were
up 15 percent in afternoon trading while Sirius was up 8.6 percent.
© 2008 The Associated Press