More Static for Sirius and XM

Like any good adventure video game, the end boss is always the hardest. That's where the game throws everything at you but the kitchen sink, making you really earn your eventual victory.

Sirius Satellite Radio (Nasdaq: SIRI  ) and XM Satellite Radio (Nasdaq: XMSR  ) seem to have reached this climactic stage, as they hope to gain the Federal Communications Commission's approval for their megamerger. The crowd opposing the deal may have thinned, but foes are still frantically tossing any obstacle they can in the satellite radio duo's way.

I already went over a few of the hoops that presented themselves last week. This week finds a Congressman requesting that the interoperable receivers also include the ability to stream terrestrial radio and the resurfacing of network interference concerns with the company's repeaters.

Rep. Edward Markey has been a critic of the deal for some time, but he took the time to write the FCC on Tuesday, suggesting that XM and Sirius should make more concessions to get the deal done. Instead of freezing rates for three years, he would like six. Sirius and XM have been willing to set aside a dozen channels for public service and minority broadcasts, but Markey would like even more. Oh, and he also wants chips supporting Ibiquity's HD Radio platform, to allow the receivers to also function as conventional terrestrial radios with narrowcasting playback.

It's an extreme request, of course. It also undercuts the monopolistic concerns the FCC cited in dragging its feet. If terrestrial radio wants new chips installed in satellite receivers -- and it remains to be seen who will pay for the chips -- it's an admission that satellite and terrestrial radio all compete for the same ears. This either renders the monopoly argument moot, or pushes the argument that terrestrial radios should be required to double as satellite receivers as well.

Earmarking even more stations for non-premium content also seems to make the deal less consumer-friendly. XM and Sirius don't have infinite swaths of spectrum. Adding channels means either eliminating existing programming or degrading audio quality by tightening the compression. Consumers lose either way. You won't be losing Howard Stern, Oprah Winfrey, or Martha Stewart Living Omnimedia's (NYSE: MSO  ) namesake star, but you'll still never get subscribers to unanimously agree which existing stations should get the hook.

There's also an RCR Wireless article detailing the old complaint that satellite radio repeaters -- devices set up in metropolitan areas to enhance the satellite signal through heavily populated areas -- could potentially interfere with the 2.3GHZ band planned for wireless Internet functionality. 

Fans of the deal should normally applaud the last-minute negativity as desperate moves against a deal that's all but done. However, next week marks the 17-month anniversary of the XM-Sirius merger's initial announcement. The delays -- and the static -- aren't funny anymore.

More on the XM-Sirius saga:

XM is a former recommendation of the Rule Breakers growth stock subscription service. Martha Stewart Living is a former Motley Fool Stock Advisor selection. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz is such a big satellite radio fan that he subscribes to both XM and Sirius. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (6)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 17, 2008, at 4:55 PM, Matt8265 wrote:

    Well Ric, you're a little late with this one since John Addlestien dropped his bomb, which BTW is a fair deal. People should thank him for countering as the quite worthless Ms. Tate planned on sitting on her hands to get reappointed.

  • Report this Comment On July 17, 2008, at 5:10 PM, Got1toBurn wrote:

    Matt... If i'm paying 12.99/mo shouldnt i be the one to choose weather i want to spend my money in a receiver that only brings in SAT Signals or not? Also, Why should 1/4 of the spectrum be saved for A. Sharpton & J.Jackson or such?

    I Agree with Rick in the sence that if Sat Radio(A PAY SERVICE) has to add terrestrial functions on their receivers than all Ter.Radios should add Sat Functions to theirs.

    All Oponents forget that No One has to buy Sat Radio Service if they dont want to to or oppose it..

    But you know what, I do have to buy gas to get to work and it sure didnt take 17 MONTHS! to have my gas prices go up?

    It's CRIMINAL! what the FCC has done to these companies..

    How can NON-ELECTED Officials get away with this???

    Please some1 let me know.

  • Report this Comment On July 17, 2008, at 5:47 PM, J56D wrote:

    DITTO

    Why should 1/4 of the spectrum be saved for A. Sharpton & J.Jackson or such?

  • Report this Comment On July 17, 2008, at 5:50 PM, J56D wrote:

    DITTO

    Why should 1/4 of the spectrum be saved for A. Sharpton & J.Jackson or such?

    I agree with Matt8265 except that 1/4 of the spectrum would not be saved for them. It would be GIVEN to them.

  • Report this Comment On July 18, 2008, at 10:48 AM, Matt8265 wrote:

    J56... wish in one hand and pooh in the other...which gets filled first?

    Of course you are correct as a purist, but this isn't about fair and right. It's about two people trying to find the correct fit that "enables" their political career. Martin,and mostly Tate have no intention to do the "right thing" they don't vote or propose the "right thing" (or in a timely manner as Martin stalled like Tate) because it would hamper their careers.

    They are political Animals trying to get into Congress (Martin) and being appointed for five more years of do-nothingness (Tate).

  • Report this Comment On July 18, 2008, at 11:55 PM, McNabRanch wrote:

    I want sat rad, a lot of people want it, we will have it.....yeah, I own some SIRI, but whether any of us make money off it is beside the point....I don't see where much analysis is required....lot's of wrongs on this country........ever dealt with the "justice" system?

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