Nearly after a year when satellite radio giants Sirius and XM announced plans to merge together, the proposal is still under regulatory limbo; frustrating many who had been expecting a verdict from the Department of Justice by the end of 2007. And this has caused shares in both companies to fall more than ten percent on Wednesday, a sign that the merger will not go ahead.
The delay was caused by an internal struggle at the Department of Justice between the attorneys, who want to block the union as it would make the new company be a monopoly on satellite radio, and the political appointees, who want the deal to be approved. Even if the Justice department signs off the $13.6 billion deal, it still needs the approval from the Federal Communications Commission (FCC), as the original licenses granted to both companies in that they remain separate.
As well, the merger has seen a strong opposition from many different areas; including the Consumer Federation of America, The National Association of Broadcasters and Free Press. However, some companies have said their approval, from the African Methodist Episcopal Church to the Women Involved in Farm Economics.
Those who want the merger to be approved says that it will allow listeners access to the range of programming offered by both providers under one subscription. This would also give a boost to both Howard Stern and Oprah Winfrey. Also in the minds of people, there is doubt if the new company would be able to make a profit as both firms have lost money since their launch, even though Sirius recorded a 38% increase in subscribers.