Monday, February 19, 2007

Sirius and XM Plan to Cross Signals, Report Says

Not more than a year ago, the idea of a satellite radio merger seemed implausible at best. But if a New York Post report, based on an unnamed source, is to be believed, the unlikely could become reality: Sirius and XM plan on announcing a merger of equals Monday. But negotiations, which took place in Washington, were described as ongoing and delicate, and a deal was far from assured.
The Post said that XM’s chairman, Gary Parsons, will retain that post, while Sirius’ Mel Karmazin will serve as chief executive for the new company.
Beyond the combining of content — Howard Stern and Oprah Winfrey, the National Football League and Major League Baseball — the deal will also save the two companies almost $7 billion a year.
Until now, the biggest stumbling block to such a merger was the prospect of antitrust concerns. Yet both Sirius and XM have grown increasingly confident that the two could structure a deal to avoid regulator ire; over the past year, Mr. Karmazin changed his tune, saying that competitors like MP3 players with built-in radio would mitigate antitrust issues.
Deal talk took a splash of cold water late last year, as Kevin Martin, the chairman of the Federal Communications Commission, said that “under current rules,” such a merger would be prohibited. But analysts later took a more sanguine view of Mr. Martin’s wording and said that a deal was still possible.
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