NEW YORK (MCT) — XM and Sirius, the country’s only players in the lagging field of satellite radio, plan to make music together, announcing a $13 billion blockbuster merger Monday.
The two giants hope to join forces by the end of this year to provide a combined 14 million customers with programming that will include both shock jock Howard Stern and talk queen Oprah Winfrey on the same pay-to-play system.
The proposed marriage of the subscription-only outfits has been rumored for months and now faces scrutiny from the Federal Communications Commission and Justice Department before it’s a done deal.
“This combination is the next logical step in the evolution of audio entertainment,” said Mel Karmazin, CEO of New York-based Sirius Satellite Radio.
Karmazin will be CEO of the united company, which has yet to be named. XM chairman Gary Parsons will remain in that role in the new company, and XM CEO Hugh Panero will oversee the closing of the deal.
XM programming includes shows by Winfrey, Bob Dylan, Tom Petty, Snoop Dogg, Opie & Anthony and Major League Baseball, while Sirius features Stern, the National Football League and Martha Stewart.
Separately, both companies have seen a 40 percent dip in their stock prices over the past year because of an inability to draw new subscribers.
Listeners pay between $20 and $350 for a satellite radio receiver and $12.95 a month for mostly commercial-free service.
XM radio spokesman Nathaniel Brown vowed current subscribers of each system will not suffer interruptions in service because of the merger. But customers may have to buy new receivers down the road to get all the programs.
The biggest obstacle to the merger will be getting around anti-trust laws. The FCC and the Justice Department could see the merger as creating a monopoly.
David Cavossa, executive director of the Satellite Industry Association, said the feds will have to decide “what is the definition of the radio market.”
“If the FCC decides this is a different entity, it will be more difficult to merge,” Cavossa said. XM and Sirius officials argue their chief competition has not been each other, but AM-FM radio, iPods and Internet radio.
XM subscriber Mark Damin, 27, of Weehawken, N.J., said he just hopes the merger improves reception.
“You have to be near a window to get great reception,” he said, while shopping for an iPod at the Best Buy in Chelsea.