I somehow expect that it will never happen -- and have wondered when we would start seeing these rumblings.

Winning approval for a proposed merger of the nation's two satellite radio companies turns on whether regulators buy their argument that iPods, Internet radio and other new technologies have expanded so dramatically that a monopoly would not harm consumers' choices or purses.

It may be a difficult argument to win, but XM Satellite Holdings and Sirius Satellite Radio's officers say it's worth the gamble and have assembled an expensive and experienced team of lobbyists to aid them in the fight. Alone, the companies have suffered heavy losses and spent heavily on recruiting personalities such as Howard Stern and Oprah Winfrey and on marketing to compete against each other.

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All those new devices, however, are not directly analogous to satellite radio, and Karmazin's plea is a tough sell, said Chad Bartley, an analyst for Pacific Crest Securities. XM and Sirius provide "the only paid-radio service out there," he said, and regulators may be loath to turn them into a monopoly. He rated the chances for merger approval at "less than 50-50."

"The regulatory process will be quite onerous," said William Kidd, an analyst for Wedbush Morgan, an investment firm in Los Angeles. Regulators will be reluctant to create a single satellite radio company, particularly because they have recruited a total of 14 million paying customers in five years as separate companies, he said.

My guess is that the merge doesn't happen now -- and only happens if one (or both) of the companies files for bankruptcy in a few years.

Posted by: Greg at 10:33 PM | No Comments | Add Comment
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