FCC Says No to Sirius and XM Satellite Radio Merger
January 23, 2007 1:42 PM
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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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Missing the Point from Geosynchronis Orbit
1/23/2007 7:41:41 PM
The point behind this delivery system is no different than the point behind sattelite delivery of anything else. It creates a homogenous product coast to coast, so I can drive from DC to LA and hear the same show the whole way no matter where I go. Just like McDonalds.
Now throw in a lack of FCC control, the ability to live beyond the ratings generated by an antiquated Arbitron system, and grow/run the business based on the quality of the content as it appeals to paying subscribers and you have a nice business model.
Regular AM and FM radio are not technically inferior, and thats not the point. The signal that an FM station can produce is exceptional as is the sound quality potential. But that has never been the issue here.
As a subscriber to both XM and Sirius, I want choice. Period. And I get it with each of them. What I dont want is 22 commercial units per hour and some lame on-air "personality" ruining the experience for me.
The FCC's approach to B'casting has hurt radio severely. Not just for the Howard Sterns of the world, but the small market radio operator that is now scared to death of losing his license or incurring a huge fine if one of his DJ's has a verbal malfunction.
The fact that most of all commericial radio is controlled by a small handful of companies now, much like back in the 30's and 40's, the risk to revenues and shareholders is so great because of the FCC that these ownership groups have screwed the lid down so tight that even the music is getting delisted, not just bleeped, for fear of a fine.
The technology of XM and Sirius also has other delivery capabilities like video and data.......and everyone seems to think that video and data beamed from a bird is a great thing right? So, whats the deal here from all the nay-sayers of this infant medium?
A merger between XM and Sirius may or may not be good for anyone or everyone, and right now who cares really? The quality of the content will be the deciding factor and right now both have plenty, and its much better than most of the terrestrial market. The music and talk options dwarf any terrestrial radio offering in any american city. If I want to hear Frank Zappa or Fats Waller, I wont find them on commercial radio anywhere, and its not because they dont have value, they just dont have enough to work in the terrestrial radio model today. Which is why terrestrial radio has more to fear from the Ipod than XM or Sirius.
Current radio management (terrestrial) are like a deer in the headlights, they are faced with a rapidly changing comfort zone that requires rapid and thoughtful reaction. Thats something that radio management has forgotten how to do in recent years because the ad revenue and audience was there. We'll now its going away, fast. If they cant post a win in 90 days or less they are dumbfounded. Radio is the victim of its own shortsightedness. Horrible for a medium that used to pride itself on the ability to be constantly reinventing itself.
Both XM and Sirius are free to start naming Channels for respective cities like Chicago or DC and create content and on-air delivery just for those markets and just like regular radio if they like. Personally I enjoy driving between Philly and Boston and never having to hit the dial to find a new station. Is it worth $13 a month for that alone, no, but when you combine it all together, and eliminate hours and hours of really poorly produced radio ads each week, the answer is yes. Yes that is unless you place no value on your own time, and I've listened to my last 8 minute long commercial break on regular radio.
RE: Missing the Point from Geosynchronis Orbit
1/23/2007 11:29:30 PM
I agree with everything you say except for your assumptions about consumers' interests in signal quality. I don't think (and I believe the sales numbers bear me out on this) that there are nearly enough people making routine long-distance trips that are willing to spend the money on satellite radio, especially if it includes "promotionals." This is especially the case when you consider the (free) low cost of owning music these days. When you consider all this, the homogeneous advantage you described begins to look less and less significant -- and yet this was one of the biggest things XM used to attract investors when it got started. On top of all that, I'm no audiophile, and yet whenever I've listened to XM, I've been quickly fatigued by the lack of quality in the sound. I think it's much more comparable to listening to one of those wacko country stations you find on AM in the middle of Arkansas. It wasn't just bad, it made me want to turn it off. As a result, I've never really considered getting a subscription to XM.
RE: Missing the Point from Geosynchronis Orbit
1/24/2007 3:35:49 PM
I think that you missed my line about the long distance trips. I said that that benefit alone was not necessarily worth the $13 a month, but that all in, the features of satellite make it worth it.
I listen to lots of talk on XM and Sirius.....NPR, CNN, Howard, BTLS, etc, so I am easy on the concerns over streaming quality. Since the music I listen to goes through my PC and into my home audio, I can monkey with it to improve the audio. Going direct from the receiver into my audio stack is even better, so I really can live with what both XM and Sirius crank out. Does it match my digital IPOD or ZEN or my hard drive, maybe not, but it gets me more choice faster........
I also stated that terrestrial radio has more to fear from the IPOD than they do from XM or Sirius........take a look at how the 12-34 demographic consumes music......it aint via XM or Sirius.......but since the FCC doesnt regulate your IPOD, the whining exec's at the major radio companies run to the skirts of the FCC to complain about the easiest target to distract the industry from the fact that terrestrial radio content has been in free fall for some time and it is now becoming impossible to hide.......
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