XM + Sirius = Oh Wait, It's Not Going to Happen

After much speculation, it appears that the prophesized — and hoped for — union of XM and Sirius simply isn't meant to be. At least, that's what FCC Chairman Kevin Martin says, posturing that such a merger wouldn't win approval under the FCC's current rulebook, given that the regulations that brought both of them into business also forbid them from being owned by a single entity.

The natural solution would be to alter the regulations, since what we're stuck with now is essentially the pre-Clear Channel state Jack Shafer describes in his column. That is, a lot of the programming on XM and Sirius is redundant, and both have suffered through sluggish growth amidst high competitive costs. (The fact that their stocks tanked following the pronouncement should tell you something.) And in a lot of ways, they're not really competing at all — if you're familiar with how they generate what little growth they do, you know what I mean.

Moreover, it's hard to call a market competitive with only two parties. The arrival of a large third party might shake things up, but even supposing the spectrum could handle another satellite provider (it can't), it would be highly unlikely, since the very public troubles of both companies have probably scared away anyone crazy enough to jump into the market.

So why not allow them to merge, cut costs, and in all odds, pass that on to customers, who then only have to deal with one, uniform satellite radio device? (I think they're more akin to two competing standards, such as HD-DVD and Blu-Ray, than they are to traditional radio stations to be regulated by the FCC in terms of ownership, so the monopoly thing doesn't even come into play.) As long as the old receivers for both were backwards compatible, it would be a win-win for SiriusXM and its customers.

FCC's Martin Says Rules Ban Satellite Radio Merger [Bloomberg via Orbitcast]