Consumer advocates will be all over the FCC on the XM (XMSR) merger with Sirius (SIRI). The case will be that the merged company will raise rates from about $13 a month per subscriber to some higher amount. That would be natural. The news company needs cashflow to pay down its huge $1 billion plus plus debt.
The management of the new company could agree to a cap or moratorium on price increases. It is, however, an inelegant way to regulate a monopoly.
A better answer might be to allow another company to come to market with a satellite radio competitor. DirecTV (DTV) perhaps. Partnered with a car company like GM (GM) or Toyota (TM). Or Clear Channel (CCU) which could put money into the pocket of a company like Loral (LORL) or Delphi, which currently makes satellite receivers.
Clear Channel and the car companies have the capital to enter the business and several of the satellite infrastructure companies could use the money.
A solution for the FCC, a match made in the heavens.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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