NEW YORK (CNN/Money) -
Sirius Satellite Radio and XM Satellite Radio are holding preliminary talks on a possible merger, a newspaper said Wednesday, but Sirius CEO Mel Karmazin denied the report.
The New York Post said the discussions between the two players in the growing satellite radio market are in the early stages, adding that executives have not yet discussed price. But discussions have been held about potential antitrust concerns, the Post reported.
But Karmazin shot down the report Wednesday morning, telling industry analysts during an earnings conference call that he has not met with either the CEO or chairman of XM, and that he had "no idea" where the rumor originated. Later in the call, he said antitrust approval for such a merger would be "difficult" to get.
A deal would create a monopoly in the segment. But the newspaper said that XM (Research) and Sirius (Research) are hoping a deal would be allowed if the Federal Communications Commission considers satellite radio as part of the broader industry delivering music and other content through mobile devices, such as cell phones.
Sirius has a stock market worth of about $7.9 billion, compared to XM's market cap of $6.9 billion, despite the greater revenue. XM had forecast sales of $80 million last year, according to First Call, compared with an estimated $70 million for Sirius. Sirius is set to report results Wednesday.
Both providers have exclusive content to provide their customers. Sirius made news late last year giving controversial radio host Howard Stern a $500 million contract to move to its service in 2006. The Post reports that Merrill Lynch analyst Laraine Mancini said one of the chief risks of investing in the companies' shares is a potential price war and "irrational bidding" for content.
The newspaper said that a possible merger got a lift from Sirius (Research)' decision to hire former Viacom (Research) President Mel Karmazin as CEO in November.
"Mel is a roll-up guy, a deal guy," said one source close to Karmazin.
The Post said Sirius would not comment on the report and XM did not return a call seeking comment.