means the DOJ has concluded that the merger is not anti-competitive and it will allow the transaction to proceed. SIRIUS and XM each obtained stockholder approval in November 2007. The pending merger is still subject to approval of the Federal Communications Commission.Long-time merger opponent National Association of Broadcasters--the terrestrial radio & TV lobby group--claims to be "astonished" by the decision, which was predicated on the DoJ's conclusion that:
the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers. The Division reached this conclusion because the evidence did not show that the merger would enable the parties to profitably increase prices to satellite radio customers for several reasons, including: a lack of competition between the parties in important segments even without the merger; the competitive alternative services available to consumers; technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers.It's been an exhausting year and the deal still awaits actual approval of the transfer application by the FCC (as opposed to the DoJ's "no action"). Stay tuned.
The March 26th Wall Street Journal proclaimed "Justice for Satellite Radio":
The Justice Department's approval this week of the XM-Sirius satellite radio merger was a long time coming -- maybe too long given that the deal was announced more than a year ago. Still, credit Antitrust Division chief Thomas Barnett for making the right call in the end.(via Carpe Diem)
Because XM and Sirius are the nation's only two satellite radio providers, the major concern is that a merger would create a monopoly able to raise prices willy-nilly. But Justice concluded, correctly, that "the evidence did not support defining a market limited to the two satellite radio firms that would exclude various alternative sources for audio entertainment."
In other words, XM and Sirius don't compete merely with each other but as part of a huge media marketplace that includes free radio, iPods, MP3 players, Internet radio stations, cable radio services and even cell phones.