• Multichannel News, Thursday, January 18, 2007 11:15 AM

Shares of both Sirius Satellite Radio and rival XM Satellite Radio fell to earth after the chairman of the Federal Communications Commission seemed to put the kibosh on any idea of a possible merger between the two.

The sell-off was sparked by comments made by Kevin Martin in response to a press query that FCC rules prohibit "one entity owning both of those businesses." Speculation about a combination of the two largest satellite-radio providers has been rife lately, with both companies apparently more open to a pact.

Sirius CEO Mel Karmazin got the ball rolling earlier this month when he noted a merger could serve the best interests of both companies. "One way you can create shareholder value is through consolidation, particularly in a fragmented industry like radio," says Karmazin. "Conceptually, a deal makes sense, and you could add value from synergies."

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