The Merger of Sirius and XM Satellite Radios

Exxon-Mobil. Merck and Schering-Plough. Whirlpool-Maytag. All of these major, fortune 500 companies, providing essential items to consumers, were approved by the Justice Department to merge, seamlessly. The investigation into the merger of Whirlpool-Maytag took six months and created a company that produces half of the dishwashers in the United States and more than 70 percent of the clothes washers and dryers (Alfano, 2006). In 1999, Exxon and Mobil merged and formed a new company called Exxon Mobil Corporation, and became the largest company on the planet. This was after these two companies had been separated by a government order in 1911. This merger, which made them the largest publicly traded oil company in the world, took a year to complete ("Exxon, Mobil mate for $80B," 1998). Satellite radio is a luxury good with competition from various free entities, while satellite radio relies on monthly subscription fees and the purchase of radios and radio accessories in order to operate.

The National Association of Broadcasting (NAB), the professional association representing "traditional" or "terrestrial" AM/FM radio has been opposing the merger because it will finally allow satellite radio to provide real competition to the medium. This is the same association that supported Clean Channel Communications to monopolize all the major markets in the United States, garnering 18% of all radio revenues (Brennan, 2008). This is only one of the free, widely available competitors that satellite radio faces. There is also iPods and iTunes, Pandora, phone based music services, cable companies providing free music streaming through the television, and illegal downloading of music on the internet. Unlike Exxon-Mobile and Maytag-Whirlpool Sirius and XM are two struggling entities, neither of which will likely be able to weather the economic downturn if they are forced to continue operating at a loss. The merger of Sirius of XM will provide the consumer with a better product and allow the combined company to increase its research and development efforts to improve technologies offered to the customer. Proposed concessions, to reduce the likelihood of unfair pricing and licensing have been suggested and the companies are willing to make these concessions. The Department of Justice's interpretation of prior anti-trust regulations supports the merger of Sirius and XM radio, and the benefits extended to both the consumer and the two entities support that this merger should be accepted

References:

CNNMoney. (1998, December 1). Exxon, Mobil mate for $80B - Dec. 1, 1998. CNNMoney.com. Retrieved July 12, 2010, from http://money.cnn.com/1998/12/01/deals/exxon/

Alfano, S. (2006, March 29). Feds Approve Whirlpool-Maytag Deal - CBS News. CBS News. Retrieved July 12, 2010, from http://www.cbsnews.com/stories/2006/03/29/business/main1454633.shtml

Brennan, T. (2008, March 24). SIRIUS Satellite Radio - Cramer: Let XM and Sirius Merge. SIRIUS Satellite Radio. Retrieved July 12, 2010, from http://www.sirius.com/servlet/ContentServer?pagename=Sirius/CachedPage&c=EditorialAsset&cid=1204897802791

CNNMoney. (1998,December 1). Exxon, Mobil mate for $80B - Dec. 1, 1998. .Retrieved July 12, 2010, from