Satellite Radio Merger Rumors Gather Steam, Again

from the less-talk-more-merger dept

Despite coming off their strongest year yet, the performance of satellite radio companies Sirius and XM still isn't quite good enough, and the companies continue to be the focus of merger talks. As we've wondered before, though, would a merger really help? The fundamental problem the companies face is that the economics of a satellite-based business are quite difficult, given the high cost of infrastructure and large initial outlay required. This is something that won't change, regardless of any merger. And despite execs from both companies saying a tieup could make sense, plenty of obstacles remain, including regulatory issues. All that aside, though, would merging really help all that much? The common thinking is that the companies would be able to combine their overlapping music programming into one, and eliminate redundancies. But it's hard to believe that operating so many music channels is really a significant cost for either company -- the real programming cost is in the millions they're throwing at celebrity hosts like Howard Stern and Oprah Winfrey, and to get exclusive deals for major sports leagues. Perhaps the thought is that by reducing the amount of competition in the marketplace, they could eventually lower the cost of these deals, but it seems awfully optimistic to think they'd be able to do this, and significantly cut costs, very quickly. Particularly when you consider they're not competing only against each other for these deals, but against terrestrial radio and other media as well.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    misanthropic humanist, Jan 12th, 2007 @ 2:10pm

    the problem

    I keep on saying it, satellite radio is stillborn. It's the same here in the UK with DAB as in Europe and USA.

    There's no demand because there's no value added. People who listen to the radio couldn't care less for the quality and they couldn't care less for the number of channels. Most listeners have it on as background noise while they work and usually tune to one station and leave it there forever. Radio listerners are notoriously loyal and very hard to move from one station to another. Also there are millions, okay I'll stick my neck out here...billions of cheap FM radio sets in the world, most of which were built to a quality that mean they'll still be here in 2030.

     

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  2.  
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    misanthropic humanist, Jan 12th, 2007 @ 2:13pm

    and the solution

    Oh and btw, so how do you rescue digital satellite radio? Here's one of those ideas that popped out of my ass (and if someone doesn't have the brains to turn this into a product and make a fortune I'll be very disappointed in you)...

    What is needed is to include the existing listeners. A $20 down converter with a cheap LMB and microwatt remodulator that can clip onto an existing FM radio and make it "satellite capable".

    Then you "phase in" your new technology over time. That's how the BBC handled the transition from 405 VHF to 625 UHF in the 1960s

     

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  3.  
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    Dam, Jan 12th, 2007 @ 2:31pm

    The Reality

    Satellite radio is not for everyone, because some people think paying for radio is a waste of money. I signed on with XM several months ago and now wouldn't be without it. The wide array of programming with few interuptions and even fewer commercials is wonderful.

    Mr Humanist, if you don't subscribe, don't slam it. Local radio in many cities has become as bland and commercial-filled as it has ever been. I'm in my car a lot and I can't imagine not having it now.

    There are a few technical issues for sure - you lose the signal when you're under a roof like at the gas station, or if an 18-wheeler passes between you and the southwestern sky, but considering the excellent music quality and range of programming, these are minor issues.

     

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  4.  
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    Matt, Jan 12th, 2007 @ 2:38pm

    Sirius Subscriber

    I've been a Sirius listener for years, even before the whole Howard thing. I have had XM in the past thought, being a driver I listen a lot, and to more than one channel, I am pleasantly surprised with Howard Stern... With NFL, NHL, and commercial free rock stations, I'd stick with Sirus, XM would prolly want to merge cuz they have really slowed down in the subscriber count... Just my opinion, I could wrong.

     

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  5.  
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    Anonymous Coward, Jan 12th, 2007 @ 2:48pm

    xm is great

    my brother had sirius in his car. i have xm in mine. i'd choose xm over sirius any day. howard stern just isn't as funny anymore and i enjoy listening to opie&anthony a lot more anyway. there's a larger playlist on xm (at least it was not too long ago, i haven't checked recently), the censorship on xm is a lot less than on sirius, and, in general, i think better songs are played on xm.

    a merger could be useful in that they wouldn't be fighting each other but profitting from each others strengths, while their weaknesses wouldn't really hurt them anymore.

     

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  6.  
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    Mikeod, Jan 12th, 2007 @ 2:53pm

    XMListener

    I've had XM for the past two years (came on my Accord Hybrid). For around $9 a month I get uncensored radio in a part of the country that doesn't receive much in the way of terrestrial radio - and what I can receive is usually static-filled almost as much as it is commercial-filled.

    I don't know what kind of administrative overhead XM and Sirius can save by a merger, but I would imagine advertising costs would drop significantly if they aren't advertising against eachother.

    My $0.02.

     

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  7.  
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    misanthropic humanist, Jan 12th, 2007 @ 2:58pm

    Re: The Reality

    "Mr Humanist, if you don't subscribe, don't slam it."

    I aint slamming it Dan, it's the future in my eyes. Just how to get there. I was even involved briefly in developing some technology for it. It makes me very sad to see it falling by the wayside. But the fact remains, over here in Europe it's dying on its ass because of lack of demand. :(

     

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  8.  
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    Anonymous Coward, Jan 12th, 2007 @ 3:03pm

    2 words: XM Comedy

     

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  9.  
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    Brad, Jan 12th, 2007 @ 3:05pm

    Sirius Subscriber

    I've had Sirius since July of 05 and now I couldn't live w/out it (like a cell phone). I wound up buying a built-in unit for my car and I don't mind the subscription costs one bit. Satellite radio in general is a great service and right now the major content differences for a person on the fence are things like Stern, NFL, MLB, etc, and of course the hardware options.

    Listening to FM is atrocious and I don't want to flip through my iPods list or burn CDs or listen to the same few songs over and over. An iPod on shuffle? OK maybe, but I still know all the songs and I don't get to hear a knowledgeable DJ come on every now and then w/some interesting tid-bit about a song or artist I just heard.

    I like the radio, I hate commercials, and I don't mind paying $ to fix that "problem" with FM.

     

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  10.  
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    Bill, Jan 12th, 2007 @ 3:22pm

    I love XM

    I hate FM radio. I just cringe when I hear the commercials. I love my XM and would never go back.

    I wonder how similar the XM and Sirius formats are. Would all of one companies radios work with the other's or would some sort of upgrade be required?

     

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  11.  
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    Anonymous Coward, Jan 12th, 2007 @ 3:54pm

    Went Sirius and Never Looked Back

    Got Sirius a year ago and have never looked back. I work in the oil patch in Northern Alberta and if you can pick up radio it is a small town AM country station. I thought I'd use while on the road and listen to my favorite stations when I'm home, but I've never switched back. I left terrestrial cold turkey and will never miss it!

     

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  12.  
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    Kraw, Jan 13th, 2007 @ 6:05am

    I've been an XM subscriber since 01. While I love it, I hate how there are more and more commercials starting to sneak in. Granted, it's a fraction compared to FM and AM, it still sucks that I'm paying and have to listen to commercials (only on select music channels)

    I can listen to XM 150 on my way to work (about 30 min drive) and only hear one set of commercials that last maybe a minute. Compared to AM, it's nothing :)

    So, yes I love it, wouldn't mind a merger if it meant no commercials.

     

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  13.  
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    leroy, Jan 14th, 2007 @ 3:16am

    xm vs. local radio

    I generally do not listen to music on XM. The sound quality is so poor, all my dumb ears hear is the digital artifact and the limp-lifeless sound "quality" of XM. So I listen to 8 or so talk channels and the XM comedy channels. The thing that makes XM worse than AM or FM is 95% of the commercials they air, are for exactly the same thing as you get in spam email. And since they dont have lots of advertisers, it's the same 15 commercials and the same 5 promos over and over and over and over and over and over. What you hear is: Do you have $15,000 in credit card debt?, Want to be your own boss and drive an 18 wheeler? Can't get an erection - here try these pills, you can be a millionaire tomorrow with our proven work at home system, is your hair falling out? re-grow a full head of hair in 20 minutes with our miracle substance, and you can save thousands a year by switching to this car insurance company...

    so what do I hate about XM:
    1. everyone sounds like they have a bad lisp
    2. it's the audio version of all the spam that my ISP filters out. And they want me to pay to hear spam.

    these two companies cannot merge with the laws currently on the books. All this discussion is them trying to get free promotion.

     

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  14.  
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    Richard Cappellano, Jan 14th, 2007 @ 5:39am

    would love a merger

    I would love a merger between Sirius and XM because I love services that are on both sides, and don't want to buy both sides of equipment.

     

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  15.  
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    300watthead, Jan 14th, 2007 @ 11:00am

    Sirius is way better

    "the censorship on xm is a lot less than on sirius"... Mr. Anonomous, that's a big joke. XM has ties to Clear Channel, the one's responsible for watering down, censoring and "Republicanizing" terestrial radio. I've had both, and Sirius has much better choices, and of course they have Howard, which is better than ever now. Long live Sirus!

     

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  16.  
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    OffBeatMammal (profile), Jan 15th, 2007 @ 10:21am

    XM, Sirius

    I have Sirius. It came with my car.

    My most listened to channel seems to be "nosignal"
    and when I do have a channel their playlist appears to be pretty short

    I don't listen to the "celebrities" because if I wanted to listen to childish chatter I'd keep my daughter in the car at all times ;)

    It annoys me (out of all proportion probably) that while in FM mode I get track details on the radio display, but with Sirius I just get the station name - seems the wrong way round somehow.

    I'd love to see something like Pandora and infinite personalisation, or at least a way to tag-and-share tracks I like (from the car and ten sync bck to them somehow)

    Will a merger help... maybe if they can spend the money on R&D and better service instead of a marketing war.

    Will it happen.... oes common-sense ever prevail?!

     

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  17.  
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    RLB, Jan 31st, 2007 @ 11:00am

    Satellite Radio

    The reason I subscribed was to get away from crap like oprah and stern........................

     

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  18.  
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    john citulsky, Feb 18th, 2007 @ 5:40pm

    sirius signal

    It seems the strongest signal that I get is "Antenna Not Detected" followed by "Aquiring signal" When it's cloudy,foggy,in the mountains of B.C. Canada anywhere but the flat prairie. I signed up for a full year but I will not renew. The radio will be going to the file "It seemed like a good idea at the time."

     

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  19.  
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    hans, Jul 6th, 2007 @ 12:32am

    hi

    Oh and btw, so how do you rescue digital satellite radio? Here's one of those ideas that popped out of my ass (and if someone doesn't have the brains to turn this into a product and make a fortune I'll be very disappointed in you)...

     

    reply to this | link to this | view in thread ]

  20.  
    identicon
    hamdi, Jul 6th, 2007 @ 12:34am

    hi

    Oh and btw, so how do you rescue digital satellite radio? Here's one of those ideas that popped out of my ass (and if someone doesn't have the brains to turn this into a product and make a fortune I'll be very disappointed in you)...

     

    reply to this | link to this | view in thread ]

  21.  
    I would love a merger between Sirius and XM because I love services that are on both sides, and don't want to buy both sides of equipment

     

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