Justice Dept. approves Sirius, XM merger
WASHINGTON (AP) - March 24, 2008 The deal was approved without conditions despite opposition from
consumer groups and an intense lobbying campaign by the land-based
radio industry.
The combination still requires approval from the Federal
Communications Commission, which prohibited a merger when it
granted satellite radio operating licenses in 1997.
The Justice Department, in a statement explaining its decision,
said the combination of the companies won't hurt competition
because the companies are not competing today. Customers must buy
equipment that is exclusive to either XM or Sirius, and subscribers
rarely switch providers.
"People just don't do that," said Assistant Attorney General
Thomas Barnett, in a conference call with reporters.
The government also appeared to endorse the argument of the
companies that they compete with other forms of audio
entertainment, including "high-definition" radio, Internet-based
radio stations and even devices like Apple Inc.'s iPod.
"The likely evolution of technology in the future, including
the expected introduction in the next several years of mobile
broadband Internet devices, made it even more unlikely that the
transaction would harm consumers in the longer term," the Justice
Department said.
The buyout received shareholder approval in November. The
companies said the merger will save hundreds of millions of dollars
in operating costs - savings that will ultimately benefit their
customers.
XM Satellite shares rose $1.97, or 16.5 percent, to $13.90 in
afternoon trading after the government's announcement, while Sirius
shares rose 28 cents, or almost 10 percent, to $3.18.