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A monopoly in satellite radio is a big no says FCC

According to several reports, FCC chairman Kevin Martin said that it is very unlikely the FCC will allow Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. to merge. Both companies represent the two leading satellite radio entities currently in business in the U.S. and unfortunately, a merger in the eyes of the FCC is an obvious road to anti-competitive grounds.

Both Sirius and XM have been battling it out for the last several years, and in 2006 both companies saw their revenues drop as well as subscriber numbers drop. This peaked a notion in the industry that it was very possible that the two companies were in negotiations to go through a merger.

Share prices from both companies had dropped significantly in 2006, with Sirius shares dropping roughly 38-percent and XM shares dropping a whopping 46-percent of their value. Despite the shares dropping, the two companies continue to operate on speculation of a merger, which was also fueled by remarks made by XM CEO Mel Karmazin and chairman Gary Parsons. With their remarks, shares of both companies jumped last month but have since declined.

It is very unlikely, less than 50-percent chance, that Sirius and XM will receive FCC approval for merger, according to Martin.  Even so, both companies will have to pass anti-trust regulations and audits. "There is a prohibition on one entity owning both of these businesses," said Martin.


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Stock
By gramboh on 1/23/2007 5:34:04 PM , Rating: 2
I feel sorry for the shareholders that held on through the hype period. I think satellite radio will be dead within 10 years, probably 5, when wifi is more widespread to all major cities in North America. Think about it, once you have a city wide subscription to fast wifi, you can just stream music content from your home PC over internet without paying a monthly fee (other than data rates if the wifi isn't flat rate). Plus you could have full internet functionality in your in-car console for google maps etc and whatever else you wanted to do. Bye-bye subscription crap like this. I see both companies transitioning to pure content providers over wifi at that point, but will they recapture the capital outlay on satellite hardware I wonder under a new business model.




RE: Stock
By mgambrell on 1/23/2007 7:31:36 PM , Rating: 2
Don't make me laugh. muni wifi wont even cover a fraction of large cities. Not to mention the distant suburbs and rural areas. Satellite radio will last forever, now that these guys have proven that it can work, simply because it can broadcast to every nook and cranny of the country (except under an overpass). That power should not be overlooked.


RE: Stock
By gramboh on 1/23/2007 8:06:55 PM , Rating: 2
Maybe not right now, but it will within 5 years, no question about it, too much money to be made. Once all major cities have good coverage, who cares about the tiny market of rural areas.


RE: Stock
By mgambrell on 1/23/2007 8:42:07 PM , Rating: 2
You telling me once theyve invested so much money in building these satellites and receivers that theyre going to throw them away in favor of taking their content over muni wifi? You're still insane. It costs them next to nothing to transmit over muni wifi. They can tack that onto their product portfolio and take advantage of brand recognition without it having anything to do with their satellite market.

So are you saying that urban users, when confronted with muni wifi, are going to toss out their satellite radios and thus cause the subscription levels for satellite service to plummet, rendering it unprofitable? Baloney. You can't take your muni wifi broadcast service on the road. Enjoy not having your favorite stations whenever you drive more than 10mi (optimistic) from town. Sure, they take the hit from folks that listen at their office and nowhere else who will switch to an internet service. But I think thats the minority. In the meantime, your incredibly underestimated numbers of people who have nothing to do with an urban core will keep on paying for their satellite service, whose rates can go up over time as people get more accustomed to paying for services that used to be free.

Actually, the only technology that has a chance at being a functional replacement enough to unseat satellite is cell-based data services which will be upgraded to unimaginable levels due to faaaaaar more demand than muni wifi to the point where they can afford to stream you your own channel 24/7.



RE: Stock
By masher2 (blog) on 1/23/2007 10:00:52 PM , Rating: 3
> " Think about it, once you have a city wide subscription to fast wifi, you can just stream music content from your home PC over internet without paying a monthly fee..."

Err, you can already listen to your entire home music collection in your car. That's not what radio is all about...its about listening to content you don't already possess.


RE: Stock
By theways on 1/24/2007 1:02:40 AM , Rating: 2
Hah, thats rich.

I drive cars for a living, and about half the vehicles I drive have satellite radio, (mostly XM, bout a 2 to 1 ratio). However, just about anyone who uses their vehicle for hauling (hotshotting) or business travel always have satellite radio.

you're not gonna get Wifi internet radio on a 5 hr drive from Dallas to Houston, let alone more rural areas. And even thou hundreds of thousands of people may live in a big metropolitan area, doesn't mean they also work there, and that half-hour, hour drive to/from work each day would be pretty boring listening to static because you can't pickup your internet radio station after the first 10 minutes.

And if you think that only a small portion of the population fits into these categories, you are sorely mistaken. Wifi internet radio would be cool, but until they can spread it literally to ever square inch of the map, it will never be able to beat satellite radio.

Personally I listen to XM about 5-6hrs a day when playing EQ2, and I have yet to hear a "promotion" from one of their music channels (broadcast through directv). Squizz/Liquid Metal FTW.


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