We’ve all heard the benefits of a satellite radio subscription. Satellite radio is commercial-free. It offers more than a hundred channels of news, music and sports. Unlike traditional free radio, satellite’s stations won’t fade in and out as you drive across rural landscapes. On top of these benefits, satellite receivers are becoming a standard feature in an ever-expanding range of cars.
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Despite their services’ selling points, XM (XMSR) and Sirius have both had their financial struggles. Some 16 months ago, the rival companies announced a plan to merge. Since then, however, the proposed deal has been stuck in a web of red tape in Washington. In the meantime, subscriber numbers have tumbled – and part of the reasoning behind FCC Chairman Kevin Martin’s decision to support a merger lies in his view that an XM/Sirius conglomerate would not constitute a monopoly since it competes for listeners with traditional AM/FM radio, HD radio, music players like Apple’s (AAPL) and ever smarter cell phones.
The merger, which has already been approved by the Department of Justice, is expected to clear its final regulatory hurdle in July. The deal must adhere to four major concessions, according to reports from the FCC:
1. Subscriptions fees will be capped for three years.
2. The company will set aside 8 percent of its channels, to be leased to non-commercial and minority-owned stations.
3. Licensing of receivers will widen to include more manufacturers, as well as the introduction of interoperable radios, within a year of the deal’s close.
4. Eventually, customers will be able to choose the channels they want through a-la-carte options.
If you choose to subscribe to one of the two satellite radio services prior to the merger, there are several things you need to know before you make your decision:
For about $13 a month, plus $100 or so for the lowest-priced equipment and a small activation fee of about $15, both Sirius and XM listeners can subscribe to their respective services. But there are some notable differences between the two. For example, once you sign up for Sirius, the company will continue to charge your credit card with the monthly/annual fee until you officially cancel. And, cancelling is difficult; while you can subscribe online, company policy forbids cancelling your service online. The only way to cancel is by calling the company’s billing department. You will be charged a cancellation fee if you cancel a one-year or longer subscription during the first year of service. Sirius’ cancellation fee is currently $75. According to XM’s terms of service, there is no extra fee to cancel the service.