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This week, another group added their support to a merger between the two satellite radio companies: XM Satellite Radio Holdings (NASDAQ: XMSR)'s and Sirius Satellite Radio Inc. (NASDAQ: SIRI). A quintet of organizations representing rural Americans presented a letter to Federal Communications Commission (FCC) head Jonathan Adelstein. An excerpt from the letter read: "This merger is clearly in the best interest of rural consumers because it would allow a combined company to expand upon its existing services with increased efficiencies and at the same time provide rural listeners with more diverse programming and lower pricing ... [the merger] will make satellite radio a more viable option for rural consumers ... even in the most remote areas."
Indeed, a combination of the two companies could bring all 4 major sports, Oprah and Stern, and John Cougar Mellencamp and Bruce Springsteen tunes, virtually commercial free, to households distanced from terrestrial broadcast towers.
Originally announced on February 19, 2007, this partnership continues to be closely scrutinized by the FCC as well as the National Association of Broadcasters (NAB). The latter organization effectively represents the combined company's would-be competition, weakening the argument that the satellite-radio merger stifles competition. But I digress before I slip into a monopoly wormhole.
Beth Gaston Moon is an analyst at Schaeffer's Investment Research.
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