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XM and Sirius Must Redefine Market to Gain Merger Approval

6:55 am on February 21, 2007 | Category: Business, Regulation, Wireless Technology

Sirius and XM may have a chance of gaining approval for a recently announced merger deal if they can convince regulators that their combined market is far broader than just satellite radio, analysts predicted yesterday.

The two satellite radio giants will need to convince the U.S. FCC, and possibly the CRTC in Canada, that the increasing prevalence of iPods and broadband internet access have fundamentally changed the industry since they were granted airwaves licenses in 1997, on the condition that they would never merge.

â€œI think they are going to prevail,â€ commented Howard Liberman, a former FCC counsel and current partner at Drinker Biddle & Reath LLP. The key, according to Liberman, will be for XM and Sirius to redraw the market itself and avoid defining themselves purely as satellite radio companies.

Regulators have loosened other restrictions in the telecom and media industries, and are often sympathetic to companies that are steadily losing money, a qualification which XM and Sirius will surely meet.

XM Chairman, Gary Parsons told CNBC reporters that he expects regulatory authorities to approve the deal by the end of the year. â€œYou would never enter into this unless you had a reasonable degree of confidence you would get the approvals,â€ he commented on Monday.

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