Talk of a radio merger

Dan Grech Jan 11, 2007

TEXT OF STORY

SCOTT JAGOW: The rumors are flying on Wall Street about a satellite radio merger between XM and Sirius. Investors are buying up the stock of both companies. But as Dan Grech reports, a deal is still a long shot.


DAN GRECH: XM and Sirius have been spending a fortune on talent and marketing in a knockdown, drag-out fight to dominate satellite radio.

Now the bruised companies are thinking about joining forces, and shareholders are thrilled. The combined companies would save an estimated $7 billion in costs.

But not everyone’s rooting for a truce.

Eli Noam directs Columbia University’s Institute for Telecommunications. He doesn’t like the prospect of a merged company.

ELI NOAM: It’s not a good idea for the providers of music, because they will face a gatekeeper. It’s not a good idea for consumers because they will pay higher prices to face. And in fact it’s not a good idea for the industry to have the option in their minds that if they overpay and overplay their cards, that they can always resort to monopolies.

Those objections aside, Noam says the FCC is unlikely to allow a satellite radio monopoly.

In New York, I’m Dan Grech for Marketplace.

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