The approval of the XM-Sirius merger is now complete and both companies plan to work together to sell satellite radio subscriptions.  The companies both sell proprietary equipment that can access only the satellite radio provided by each company but now after an agreement is made the two hope to sell a package of both XM and Sirius channels for just $16.99 a month.

The companies both had the ad-free claim to fame that is popular with music and sports enthusiasts.  For just a small fee of $6.99 consumers were able to get 24/7 ad free programming of music and sports from a variety of stations offered by the companies.  Now that the merger is complete it should be possible to get programming from both companies without having two devices.

There was some serious lobbying in the merger, broadcast radio lobbying firms were adamant about keeping the merger from completion.  The lobbyists wanted to convince consumers and regulators that this would prevent competition and create a monopoly.  XM and Sirius made the case that the satellite radios were still in competition with broadcast radio and had a reason to keep prices down in order to win customers.  XM and Sirius must have been very convincing as the merger will go through, even with two giants in one industry.  The new company will not have any competition in the satellite radio industry.

XM and Sirius should be able to achieve profitability as they will no longer have to spend billions in advertising to put each other out of business.  Since their inception, neither satellite radio provider has made a profit.  In fact, both companies are on the brink of being grossly unprofitable.

We’ll have to see what the companies can do after the merger, at this point its anyone’s game.  The duo are facing huge losses and a limited customer base but have plenty of room to grow.  The balance sheets should look better after the two merge and cut costs, hopefully gaining customers in the meantime.  I’d hold here, no new positions until we see a lively balance sheet.