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Satellite Radio Merger Approved

"We continue to believe that consumers are best served by competition rather than monopolies," said Dennis Wharton, executive vice president of the National Association of Broadcasters.

Gigi Sohn, president of the consumer group Public Knowledge, said "consumers will be better off than had the merger been granted without any conditions" but lamented that some of the conditions did not go far enough.

The combined company has agreed to offer more educational and minority programming. It will allow any radio-device manufacturer to build and sell transmitters, giving consumers more choice.

Further details about the merger order will be released Monday by the FCC.

XM began in the basement of a Dupont Circle office building and was incorporated in 1992. In 2000, the company moved to a 150,000-square-foot building on New York Avenue NE. The combined company's headquarters will be in New York, but it is expected to maintain operations in Washington.

The merger's completion is a relief to shareholders who have expressed frustration with the prolonged approval process. XM and Sirius have struggled financially and have said that joining forces is the only way that they can survive. Music-enabled cellphones, iPods, music Web sites and traditional radio stations all provide increased competition.

The merger will allow the companies to eliminate overlapping transmission towers and programming, both of which have been areas of heavy investment.

"Together, they are not only lessening the competition between the two but they can potentially improve the cost structure and have the opportunity to move toward profitability," said Stanford Group analyst Frederick Moran.

But the financial rebound will not be immediate, he added. Although the new pricing packages may appeal to current subscribers, who would like to receive their fix of Howard Stern, Oprah Winfrey and Major League Baseball from the same source, the options may not be enough to persuade new customers to buy radios from retail stores such as Best Buy and Circuit City.

Auto manufacturers, Moran said, will probably continue to be the core driver of subscriber growth for the combined company.

"When you are gifted the radio unit with the car, there's a strong chance you'll become a subscriber," he said. "Consumers going to Best Buy probably have other products higher on their list," especially in tight economic times.

Separately, a majority of FCC commissioners voted last night to penalize Comcast for interfering with subscribers' Internet traffic. The nation's largest cable service provider was accused of violating agency principles regarding network management.

The decision will not be final until all commissioners vote. The FCC will act on the issue Friday.


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