XM & Sirius Radio Merge In U.S But What Does That Mean For Canada?

The merger that everyone thought was coming finally did on Monday.

The two big satellite radio networks have finally agreed to join forces.

XM and Sirius have only been around a short time and both have been beating each other up corporately to attract new subscribers.

Sirius gave a monstrous contract to shock jock Howard Stern to acquire his exclusive services, while XM boasted a number of major ‘firsts’ of its own.

But both were always skirting profitability and it might have taken several more years for either to reach a break even point.

The new deal will create a company valued at $13 billion instead.

XM and Sirius both sell their own equipment and their own programming, and their long rumoured corporate marriage is anything but a fait accompli. U.S. regulators are likely to give the combo a long, hard look and it’s by no means a sure thing that it will be rubber stamped by American authorities.

A clause in the U.S. Federal Communications Commission ruling granting licences to the satellite radio operators clearly states that one company can’t own the other one. But the agency could change or waive the rule. And there are other regulatory hurdles in the way.

The merger would appear to mean that the Stern show, the marquee attraction, would then be made available to subscribers of both services. It’s not clear how they’ll handle the crossover, what the new company might be called or whether any of the equipment required to receive the signals – which customers have to pay for – will be rendered obsolete.

But the deal opens a host of other questions beyond just the U.S.

Both XM AND Sirius have subsidiaries in Canada, in partnership with separate broadcasters here. It’s not yet clear what happens to the services people in the Great White North get or whether they’ll also be combined.

Both are playing up the news with big smiles.

“This is great news for the satellite radio industry in North America and could offer further benefits to consumers, retailers, partners and shareholders,” predicts John Bitove, chairman of Canadian Satellite Radio, which is partnered with XM.

“Canada’s 300,000 subscribers will continue to receive the best news, talk, sports, entertainment and commercial-free music programming available,” promises Sirius Canada’s Mark Redmond.

But neither company here can make much of a move until they know what happens in the U.S. And that decision could be a while in coming.

In the meantime, both services will continue independently until the issue is finally settled one way or the other.