Whether you call it a merger or an acquisition, the actual closing of a deal between Sirius and XM relies in great measure on a different definition: the meaning of competition in a multi-platform world. The satellite radio competitors content that there is enough competition in the radio space to merit federal approval of their plans. During an impromptu press conference last month at CES, I had the chance to ask FCC Chairman Kevin Martin about the impact of access to media in multiple formats and on multiple platforms when it comes to defining competition in FCC terms. Martin parsed through the question, then said: “The changes in technology that are occurring are allowing different platforms to be utilized to compete with other platforms that they weren’t previously allowed to. But our definition of a market is based upon—in the context of any particular transaction—is based upon the market as it exists now and what is the evidence of that competition actually occurring. There are certainly big changes that technology is allowing or that we’re beginning to see and the impact of those varies with different sectors.”
When I asked specifically whether there was enough competition to give XM and Sirius room to consider a merger, Martin replied: “We’ll analyze any application when it comes in but, on the other hand, I’m not sure what them or anyone is describing as new competition in the radio space. The most direct analogy is what we’ve done on the satellite television context, where we said the marketplace that was relevant was the video marketplace and I think we were including cable but we weren’t including things like DVRs or DVDs. We didn’t include either of those in the video marketplace. We were talking about the delivery mechanism and I think that’s the best analogy I have.” (A few days later, he said FCC rules wouldn’t allow the two licenses to be owned by the same entity.)
Basically, Sirius and XM have to convince the FCC and other regulators that they have more to fear from others than from each other. They don’t want to be viewed as the two companies in the satellite radio space, instead describing the need in their announcement to merge to better compete “in the highly competitive and rapidly evolving audio entertainment marketplace.” That definition includes “existing competition from free ‘over-the-air’ AM and FM radio as well as iPods and mobile phone streaming, satellite radio will face new challenges from the rapid growth of HD Radio, Internet radio and next generation wireless technologies.”
Martin’s point about excluding DVDs and DVRs from the video marketplace would seem to preclude iPods and MP3 players as part of the audio marketplace although mobile phone streaming could be viewed differently. Then again, some of that mobile phone audio streaming comes from satellite radio. 
Update: Reuters: Martin said after today’s announcement that the hurdle would be high, again citing the prohibition against one company owning both licenses (that can be challenged) and the need to demonstrate that consumers “clearly” would be better off.