In 1992, the FCC set aside certain radio frequencies to create the Digital Audio Radio Service to create radio programming via satellites. The FCC held an auction for the rights to use these frequencies for broadcast. In 1997, two companies won the licenses. American Mobile Radio (which later became XM Radio) paid $93 million, and CD Radio (which later became Sirius Satellite Radio) won a license for $89 million.
In the spring of 2001, XM radio launched its first two satellites, "Rock" and "Roll." On September 25th, XM rolled out its new satellite programming with the limited service to San Diego, California, and Dallas/Fort Worth, Texas. On November 12, XM rolled out service to nationwide subscribers. Sirius launched its satellite radio in February of 2002 in Denver, Houston, Phoenix, and Jackson, Michigan. Sirius launched to the rest of the country on July 1.
As the companies began to grow, they ran into the problems. The cost of launch was more than either company was expecting and their subscriptions grew at a slow, albeit steady, rate. In 2004, a banner year for both companies, XM radio signed radio personalities Opie and Anthony and made a deal with Major League Baseball to broadcast games. Sirius struck back at their competitors by signing Howard Stern to a 5 year contract (which began in 2006). While very these deals were lucrative for both companies, they each began to have financial woes.
Sirius and XM announced a plan to merge on February 19, 2007. From the beginning, the merger was met with resistance from the Department of Justice and the FCC due to anti-trust and licensing issues. On March 24, 2008, after 13 months of deliberations, the Justice Department declined to block the merger, opening the FCC up to voting on the issue. The vote took place on July 25, 2008, and the FCC decided in the companies favor. The new company, Sirius XM, began to slowly move forward with the merger, officially completing on July 28. By November 2008, the companies were airing their combined programming.
While the combined company is doing better than they were apart, as of 2009 there was still $1 billion in debt to be addressed by the new conglomerate. On February 17, Sirius XM entered an agreement with Liberty Media Corporation to buy some of their debt for $550 million for 12.5 million shares of stock. Because of this, the company was able to project a positive cash flow for 2009 and is optimistically moving forward.