Great question...and one I would like to explore myself; Sometimes feel that such rational thought doesn't have a place on this board; But, getting to your point, I must say that I have pondered the very question you ask; As a loyal fan-subscriber of Sirius...I was very pleased to learn of the merger..., but and however, red-flags did go off, b/c of the FACT that the Federal Government did issue ONLY TWO licenses in the SDAR spectrum! Yes, satellite-radio competes with everything Mel&Co. has mentioned, that is a fact; But I think he is being naieve or fascitious when he says that "if you believe that satellite radio only competes against 'the other satellite-radio provider'...then the merger will not be approved, but if you believe satellite-radio competes against a host of other entertainment mediums, then you will agree that this merger gets done"! That's naieve or fascitious, b/c you could argue the same point with regard to Direct TV and Dish, when they saught merger approval; It came-down to the licensing issue! Pure and simple, imo!
But, the silver-lining is that you can ammend the licensing arrangment, imo; You've got to be able to allow a potential competitor to "launch-service" in this SDAR field; How can you grant sole authority to broadcast in SDAR to one company? That's against the very nature of a "free-and-competative market"! So, I think you are on to something, when you talk about having to 'give-up spectrum'...or ammend your broadcasting powers!
So, if the "deal-gets-done", but not under the original 'mega-spectrum' vision that both companies had in mind, then what? I still say it's a 'win-win' situation for everyone involved; You preserve the compatitive landscape, by allowing 'another player' to give-it-a-go, yet you also allow the consumer to be best served by merging two great programming line-ups....with a la carte provisions!
I think some form of the above is how it will go down; I'm very skeptical of a full-blown-no-provisions-merger...and I see some willingness to entertain, even approve, some sort of merger-like-scenario by the DOJ and FCC!
If you are asking from an investor's perspective, my advice is to slowly build a position...with the idea both Co.'s stock price will rise, as Dec. approaches....put-in a stop somewhere above your entry....and pray like hell that the ball rolls!
That's my strategy, anyhow! I support a merger btw...but I wouldn't want another Co. to be locked-out of a desire to enter this competative landscape!
Spectrum is very limited (thus valuable) for a number of reasons. Simply put...
First, it has to be suitable for the purpose -- all frequencies have certain characteristics in terms of propagation, wavelength (size of antennas), atmospheric / ionospheric absorption/refractivity, susceptibility to impulse noise, and so on and so on. These factors determine whether or not a particular frequency is suitable for a particular purpose.
Next, it has to be available -- not already in use by some other service, military, civilian or commercial. Most usable spectrum is already in use. Your microwave oven uses spectrum.
Last, it has to be coordinated with other countries who may use or plan to use the desired frequencies for other purposes. Unlike terrestrial spectrum usage, spectrum used for satellite transmissions covers a much wider area and crosses international borders. Your SIRI radio will work fine in most of Canada and Mexico.
Spectrum is very limited. There is no way to make new spectrum. Spectrum only becomes available when the use of a given chunk of spectrum is shifted from one purpose to another. For example, with the conversion from analog to digital television, the existing spectrum for television will be "compressed". The abandoned spectrum will be auctioned off for a variety of other uses. None of that spectrum is really ideal for SDAR.
Good question...I really don't know! Funny how we are invested here...and don't know the answer to this 'very-key question'; I don't feel too bad, b/c many top brass at Sirius/XM probably don't know the answer either; But it would be nice if someone 'in-the-know', would inform the board here!