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Monday, February 19, 2007, 06:00 pm PT (09:00 pm ET)

Sirius and XM join forces: iPod integration made easy?

Satellite radio powerhouses Sirius and XM said this week they hope to tie the knot and merge into a single mammoth provider, a move which could simplify integration of the radio service in iPods sometime down the line.

Although many had dismissed the possibility of the deal ever taking place due to anti-monopoly laws, the once-bitter enemies agreed Monday to bury the hatchet and join together, forming a single corporation that would effectively go unchallenged in its corner of the radio universe. The rough value of the partnership would amount to some $13 billion.

The pact is a "merger of equals" where neither company intends to erase the other, a spokesperson said. In addition to an equal level of top brass, which sees Sirius Radio's Mel Karmazin take the CEO helm while Gary Parsons of XM assumes the chairman role, both firms expect much (if not all) of their existing content to remain in one piece.

Channel selection should balloon thanks to the merger. Moreover, hardware development should enter the fast lane as satellite receiver makers whittle down the number of separate chipsets they have to make, the firms claimed.

Tellingly, Sirius and XM agreed in the announcement that their primary rivals weren't each other, but instead other formats. The announcement specifically called out the threats from "iPods and mobile phone streaming," reflecting the increased pressure to compete with not just radios, but with the digital music players that replace them.

The news resurrects the possibility of iPod integration with satellite radio, an idea previously killed off by Apple CEO Steve Jobs. The Apple frontman shelved the idea after negotiations with Sirius chief Karmazin failed to impress, saying that a lack of interesting content was a key obstacle — an obstacle now at least partly removed by a near doubling of channels.

Hardware implications could also benefit the iPod maker, allowing it to target more listeners should it ever build in a satellite radio tuner. Apple is certainly no stranger to the concept and was caught trademarking the possibility of satellite music streaming in its enigmatic "Mobile Me" application.

Regardless of Apple's inclinations, the company will have to sit tight before it can act on the new radio alliance: an approval of the Sirius/XM merger by the FCC and shareholders isn't anticipated until the end of 2007.