Tuesday, March 25, 2008

Satellite radio will survive

WASHINGTON (Reuters) - Sirius Satellite Radio's (NasdaqGS:SIRI - News) $4.59 billion purchase of rival XM Satellite Radio (NasdaqGS:XMSR - News) was given antitrust clearance on Monday as the Justice Department concluded consumers have many alternatives, including mobile phones and personal audio players.

Investors sent shares of both companies sharply higher even though the Federal Communications Commission must still approve the combination of the only two U.S. providers of satellite radio, a deal first announced in February 2007.

In a victory for Sirius Chief Executive Mel Karmazin, who lobbied hard for the deal, the Justice Department agreed the satellite radio companies face stiff competition from traditional AM/FM radio, high-definition radio, MP3 players and programming delivered by mobile phones.

"Competition in the marketplace generally protects consumers and I have no reason to believe that this won't happen here," Justice Department antitrust chief, Thomas Barnett, told a conference call with reporters.

The traditional radio industry, consumer groups and some U.S. lawmakers had criticized the deal, which would bring entertainers such as talk show host Oprah Winfrey and shock-jock Howard Stern under one roof.

The National Association of Broadcasters, which fought against the deal, said the Justice Department had granted XM and Sirius a "monopoly" and called the decision "breathtaking."

Sirius and XM, which are losing money, each currently charge subscribers about $13 a month for more than 100 channels of news, music, talk and sports.

New York-based Sirius' programming includes lifestyle guru Martha Stewart and NFL Football while Washington, D.C.-based XM is home to Bob Dylan's radio show and Major League Baseball.
The Justice Department said the combination would lead to "substantial" cost saving steps such as consolidating the line of radios they offer. It said those savings would "most likely to be passed on to consumers in the form of lower prices."

I bought a Sirius radio nearly two years ago and since then I have only listened to terrestrial radio for the Rush Limbaugh Show and the occasional weather broadcast. For music there is no comparison to broadcast radio. Every kind of music you could want to listen to has its own channel which plays 24/7 with no commercials. I could not imagine going back to antique radio.