Ups and Downs: XM Loses AOL Deal, But Gets Sirius Radio Merger Approval From Justice Department

Posted Mar 24, 2008

“Competition in the marketplace generally protects consumers and I have no reason to believe that this won’t happen here,” stated Justice Department Antitrust Chief, Thomas Barnett.

Sirius Satellite Radio Inc. (NASDAQ:SIRI) has received the approval it needs to purchase XM Satellite Radio (Public, NASDAQ:XMSR) for $4.59 billion. The Justice Department has given both companies antitrust clearance on the basis that consumers have choices. This includes audio on mobile phones and other personal digital music players. There is still one hurdle left: the FCC. Both companies have to get approval from the Federal Communications Commission.

CEO of Mel Karmazin made a promise to the government that if both companies were to combine, they would give consumers options such making certain channels available “a la carte.” And consumers would be able to block adult content and receive refunds for channels that they don’t want. This promise made by Karmazin may influence the FCC decision.

Sirius and XM Satellite radio charge roughly $13 per month to subscribe to their services. If both companies merge, the monthly price for their services is undisclosed.

Earlier this month, AOL made it clear that XM will not be power AIM Radio or Winamp starting on May 1st. This partnership break is related to AOL’s shift in advertising effort. AOL Radio will now be powered by CBS. CBS Radio will be taking over the advertising sales for AOL and will be splitting revenues.

Going forward, I think AOL Radio is going to suck. I was just comparing XM Radio’s channel listings with CBS Radio. XM stations are unique and have more interesting options compared to CBS. AOL wasn’t making much money from the XM Satellite Radio deal so it may have made sense for them to switch. I have a feeling that I may not be the only one that is going to stop listening to AOL Radio though.

Information Sources:
[1] Engadget: XM / Sirius merger approved! by Nilay Patel
[2] Washington Post: AOL, CBS Team Up For Radio, Advertising by Cecilia Kang