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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1/23/2007 8:06:55 PM
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.
1/23/2007 8:42:07 PM
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.
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