On January 17, 2007, FCC Chairman Chris Martin mentioned that “there’s a prohibition  on one entity owning both of those licenses.”  This was in the reference to the SIRIUS Satellite Radio (Nasdaq: SIRI) and XM Satellite Radio (Nasdaq: XMSR) merger discussion.  This kind of statement seems like a common response by a person high up at the FCC.  If he had said anything else, it would suggest the FCC was in favour of antitrust action before a study was conducted on whether the merger would in fact be considered an monopoly.  Now that all depends on how you look at it:  if you only looked at satellite radio then yes the new company would be a monopoly; although, if you considered all forms of mobile entertainment as competition, then it would most definitely not be a monopoly.

Investors however don’t respond well to news like this.   After Chris Martin’s comments, shares of XM dropped about 10 percent to close at $15.45 while Sirius shares fell by about 7 percent to $3.86.  Not surprising at all since these were probably the same investors raising the stock last week when the merger talks were really starting to heat up.  I have a sneaky feeling that this won’t be the last we hear about a possible merger though.  Both the satellite radio companies are facing a lot of competition from the mobile music market and need to do something to stay ahead.