The New York Post is reporting that satellite radio providers Sirius and XM will announce plans to merge today, following a weekend of round-the-clock negotiations. Although the paper says the talks “could coll apart at any time,” the paper claims the new company would be framed as a merger of equals (rather than one company taking over the other); however, as Sirius currently boasts a greater value, it’s expected Mel Karmazin’s company would come away with a majority share of the new company.
Merger rumors have swirled around the two companies for years, with Sirius chief Karmazin repeatedly talking openly about the idea of merging the two companies and noting the two companies’ business models and customer markets are very similar. XM Satellite Radio, however, has remained mum about combining forces with its main competitor.
The New York Post reports that the companies are focusing on the details of a merger agreement and leaving regulatory concerns aside for the time being. However, regulatory issues would seem to put the kibosh on any planned merger between the two companies. FCC Chairman Kevin Martin told reporters as recently as last month that a “prohibition” prevents one company from owning both satellite radio businesses, so a rules change would have to be enacted before any merger could be proposed or approved. Any merger would also have to win the approval of antitrust regulators, who are likely to take a dim view of reducing competition in the satellite radio business. Satellite television providers EchoStar and DirecTV proposed a merger in 2002; the deal was withdrawn before the FCC issued a final ruling, but former FCC chair Michael Powell described the proposal as representing “substantial anticompetitive harms.”