Satellite Radio Strategy

Should XM and Sirius hook up? Olga Kharif writes that

Indeed, a trickle of alternatives is turning into a flood. Digital radio broadcasts, podcasts (recordings of music or talk than can be downloaded onto PCs or portable MP3 players), and song download services via wireless networks are taking off. Come 2006, wireless-network owner Crown Castle is expected to launch an audio and TV service for cell phones — a market that XM and Sirius are also interested in developing. Worse yet for the satellite boys, Motorola (MOT ) is planning to bring out an ad-free wireless audio service for the car market — XM's and Sirius' bread and butter.

Just like that, the $310 million satellite-radio business is looking like a pond compared to the wider wireless ocean — and the pond is getting crowded. Rather than duke it out, XM and Sirius may find it more advantageous to present a joint front to competitors.

Would it benefit the shareholders of each company? problemably. But these types of relationships are often thwarted by management egos.