Tuesday, February 20, 2007

Merger of Equals

Just thought I'd point out the irony of last night's Wall Street Journal home page. XM and Sirius are trying to embark upon a "merger of equals" while another company, which was cast as such 9 years ago, is trying to unload what is definitely its more unequal "half".

When the DCX tie-up was called a "merger of equals", investors cried bloody murder, due to the obviousness of the misnomer. In another irony, Chrysler has grown even more unequal to the Daimler portion, having watched its value shrink from $35 billion to $5 billion since the "merger".

This latest situation, though, is much different. Here we have a potential tie-up of two companies that have yet to turn a profit. Neither one is dominant, and in fact this transaction could have real benefit for consumers. Satellite radio does have a true competitor in free, commercial-supported radio. And given that the competition has apparently overwhelmed both satellite companies, there should be no regulatory obstacle to the merger.

Also consider this: if XM and Sirius were to join forces, never again would my mom have to choose which set of stations she would receive--and this is completely true--based on which color Audi she purchased.

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