Rivals XM Satellite Radio and Sirius Satellite Radio have announced there intentions of merging to create a single giant satellite radio company, with a combined market value of approximately $13 billion. However, it does not have FCC approval as of yet so it's not a sure thing. DirecTV and DISH Network attempted a satellite monopoly merger of their own but could not gain the support of the FCC. The reason being consumers would only have one option for satellite television.
The reason for XM and Sirius' desire to merge is pretty simple: both companies are bleeding money. The two satellite radio giants lost $1.5 billion combined in 2005, and the still unannounced 2006 figures are expected to be similar.
Okay, on to the sports part.
In an arms race to acquire exclusive content both companies scrambled (and spent big dollars) to lock the broadcasting rights for sports.
So far Sirius has:
• Locked up NFL rights for $200 million plus stock options
• Bought the rights to NCAA's March Madness tournament
• Stolen the NASCAR Nextel Cup from XM
• All this plus landing the biggest radio free agent ever: Howard Stern for $500 million over five years.
Meanwhile, XM has:
• Forked over a $650 million payout to broadcast MLB games for 11 years and for the "Official satellite radio provider of Major League Baseball" tag line
• Secured rights to NHL
(We won't even go into CFL, soccer, tennis, and golf.)
Each provider inked past and present sports personalties to host shows on these channels when there's no games on.
So it's easy to see how the large price tags for pro sports content effected on each companies ability to turn a profit.
What does it mean to sports fans? If the merger gets the OK then we have a single amazing product to listen to practically any sport going on anywhere in the world as it happens.
Article comments
1 - RJ Elliott
Since they've merged and they now have a monopoly on satellite radio, can I expect the monthly fee for their service to double?