The Fun Part Is Over, Now The Real Work On The XM-Sirius Merger Begins

from the questions-aplenty dept

Now that the dust is starting to settle a bit around the XM-Sirius merger announcement, a closer look is being taken at the merger's chances of succeeding. As we've noted, the biggest hurdle to overcome will be government approval from the FCC and the Department of Justice. While some see a shifting antitrust environment giving the satellite radio companies some hope with the DOJ, the FCC's rejection of a DirecTV-Echostar merger four years ago, as well as comments by chairman Kevin Martin, make it clear the companies have quite a fight ahead of them. The key is convincing the FCC that the companies compete in a market that's bigger than just themselves -- that is, they don't just compete with each other, but with other types of audio content. It's a valid point, but one the FCC rejected in the satellite TV merger. However, they could receive some unintended support from an unlikely source: terrestrial radio broadcasters. Quickly after XM and Sirius announced their merger plans, the National Association of Broadcasters (predictably) issued a statement saying what a bad idea it was, just the latest in its long and storied history of trying to protect its turf from a relatively new competitive threat. If the NAB is so concerned about the effect of satellite radio on its terrestrial member stations and broadcasters, doesn't that illustrate that it sees XM and Sirius as competition?

If the satellite companies can overcome that hurdle (and that's a big if, particularly given the way Martin and the FCC generally seem confused about competition), other questions remain. Martin has also said that they must be able to show that "consumers would clearly be better off with both more choice and affordable prices" if the merger was approved. This plays into the issue of competition: the key task for a combined XM-Sirius would be to grow its subscriber base and convince people to spend their money on its services, rather than other types of audio content. It can't do that by raising its prices and offering consumers a less valuable product when, as one article says, users already see the service's monthly fees not in terms of dollars, but as "the equivalent of 13 iTunes downloads." Again, the competition these companies face is much bigger than just the competition between the two of them as standalone entities, so it's unlikely that combining them will result in drastically increased prices and a worse product for consumers. The other potential problem? As always with Martin involved, it's indecency. The FCC doesn't currently have the power to regulate programming on satellite radio, and Martin could insist the companies "voluntarily" comply to some oversight or federal standards as a condition of merger approval. XM and Sirius appear to recognize this, though, as they've already mentioned a desire to let customers pick channels on an a-la-carte basis of sort -- hitting on one of Martin's favorite pet ideas.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    PNess, Feb 21st, 2007 @ 10:30am

    if the FCC sees the whole picture they will see you can get 90% of the content from other sources

    - TV Free= (MLB/NFL/NAScar/Ect)

    - TV Pay= Stern, NFL other then your state

    - Radio Free = ALL music content FREE

    - HDradio = Digital All Music content Free

    - MP3 Pay = Itunes, Yahoo, Napster, Walmart, Ect.... EVERY song XM/Sirius plays. Yahoo even has a 6 dollar monthly fee, which is less then XM/Siri and gives you as many, if not more songs.

    - Radio Free- Other Exclusive talk content not on SatRadio = Rush, Hannity, Dr Laura, Savage. they ARE THE TOP 5 RADIO TALK SHOWS which RUSH alone has more listeners then all of SAT radio. together they have 40m listeners, which sat wont see for 10+ years.



    There is one reason and only one reason why the NAB would even get involved. SAVE THE MONOPOLY on the advertising dollars in THE CAR. they own 98% of the market for the morning/afternoon drive from work, and they cry about a SAT merger. because they are afraid they will add commercial channels and their talk shows would have more command for this market.

    they are so two faced its note even funny. NAB says SatRadio is a non issue that will fail, but then does everything from lawsuits, hardware recalls, repeater lawsuits, ect to get them to go bankrupt.

    hmm who is the monopoly that we should worry about?

     

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  2.  
    identicon
    Leroy, Feb 21st, 2007 @ 10:46am

    Better before the next election

    While they have until the next presidential election to get the job done, I still don't forsee it being approved. My prediction is, after the merger falls apart, one of the big automakers will step-in and buy XM. The real suiters are waiting while the price continues to fall.

    However, if they can pull it off the only chance they have is during the republican controlled FCC, which ends in less than 2 years.

    "L"

     

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  3.  
    identicon
    XM Fanboi, Feb 21st, 2007 @ 11:21am

    Merger good - price increase bad

    I'm a big XM fan since my wife got it in her car. The plus for me is the choice and lack of annoying DJ's or commercials (for the most part). I welcome a merger, but fear that will result in increased prices. The saving grace will be if someone in "XMSirius" understands that they aren't competing against "free" (to steal a line from other discussions) but rather that they are competing against all the other entertainment avenues I have to spend my dollars on and not price themselves out of my budget.

    We spend $20.00 per month for our service after spending about $550.00 for equipment. We listen roughly 3 hours per day, more on weekends, but its pretty much background music around the house. I'd be hesitant to spend much more and if it hits $30.00, I'm probably out for a WiFi alternative and my mp3 player in the car.

     

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  4.  
    identicon
    PNess, Feb 21st, 2007 @ 11:22am

    Orbitcast said it best

    "...yet the curious thing is that in SEC filings (e.g., CBS Corp's 10-K) made by terrestrial radio corporations, it's clearly stated that satellite radio is in direct competition with terrestrial; as is Internet radio and digital audio players. That opens up the argument that satellite radio is part of a greater audio marketplace.

    Can't have it both ways boys. Either we're competition, or we're not. But since it's already in your filings, which constitute admissions under the law, then you've already defined the marketplace for us. So thanks.

     

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  5.  
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    Unknowledgeable Geek, Feb 21st, 2007 @ 11:25am

    Republican

    Republicans will let this pass? What?

     

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  6.  
    identicon
    Bill, Feb 21st, 2007 @ 4:00pm

    more $$$ for XM and Sirius from listeners

    I saw the XM CEO yesterday on CNBC and he was talking about offering a la carte packages to their subscribers after the merger. This means if you want talk AND music AND sports you have to order all the la carte packages and it's going to cost you more than you were paying before the merger.

    I'm sure each package will be cheaper but who wants just one of the packages? I love my XM but if they start trying to screw me out of more and more money every time my plan runs out I'll cancel it all. Reminds me of my local cable TV monopoly!

     

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  7.  
    identicon
    Danny Overton, Feb 21st, 2007 @ 6:52pm

    No to price increase

    I have Sirius service. It's great compared to the crapola radio stations we have herein NW Ohio. However if they raise the price I will cancel all my accounts. Customer service sucks...BADLY...and I REFUSE to pay another cent for their service. As far as ala carte packages..that would be a maybe for me. Depends on what I could get...I don't listen to any of the talk stations, Howard Stern is an idiot just as bad as Bob and Tom. If I could get rid of all talk crap, Napcar channel and keep baseball and football plus pick the music channels I want (I don't listen to 99% of what they have on anyway) I might be willing to pay a very SMALL amount more. Fix your crap customer service too!!!!

     

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  8.  
    identicon
    Kevin, Mar 6th, 2007 @ 11:12am

    NAB and ASHCROFT- Now there's an idiotic merger

    Hire perhaps the most unpopular and out of step attorney general in history to blast the only fair competition the NAB has or might ever see, and do it after said competition was smart enough to turn down the shill offer. What is the NAB so afraid of? If they weren't so scared and had a copy of Sun Tzu handy, they'd know enough to encourage the merger, let it happen and then bludgeon the single debt ridden enemy into submission with HDradio, which will inevitably be ruined by commercials by the same paranoid monopolistic greed the National Association of Broadcasters is displaying right now. Good luck to the two sat radio teams for having the guts, if not the pockets, to do whatever they can to stay in the fight. Get your act together NAB and fix the things that drove people to pay for a previously free service in the first place. I hope the merger goes through big time.

     

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