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Ethiopian-born Noah Samara is founder and CEO of WorldSpace, an international satellite radio service that is partly owned by XM.
A founding father of satellite radio tells DailyTech that the XM-Sirius merger would create more choice -- not less.

Noah Samara, CEO of WorldSpace, says that for satellite radio to thrive, the FCC must approve the merger of the only two satellite radio broadcasters serving North America.

Samara was involved in satellite radio from its inception. He was instrumental in developing and licensing key technologies for the launch of XM in the early '90s before turning his attention to creating satellite radio services for Africa, Asia and Western Europe. In an exclusive interview with DailyTech, Samara called on regulators to support the merger and look for alternative ways to ensure that consumer interests are protected.

"There are other ways of ensuring that the consumer is not price-gouged," Samara said."The FCC could find those ways and ultimately benefit the public interest."

The biggest benefits will come in the form of new and innovative programming, made possible by the economic efficiencies XM and Sirius will realize as a merged company, Samara said. In the current situation, both companies are hemorrhaging money because of the exorbitant sums each must pay for premium content, he said. "In a duopoly, each player is doing everything it can to undermine the other."

Sirius' and XM are "not profitable because, though the product is good, bringing it to the consumer has been very expensive," Samara said. He cited examples such as XM's $650 million, 11-year contract to broadcast Major League Baseball and Sirius's 5-year, $500 million-plus package to lure Howard Stern away from FM radio, making him perhaps the best paid "talking head" in the world. "This one-upmanship has driven up the price of the content and therefore the ultimate breakeven point for the business," Samara said.

By ending the content bidding war between the two companies and allowing them to reduce costs by eliminating redundancies in their operations, the merger could usher in a "new golden age of radio -- except this time on steroids," Samara said.

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RE: Producer monopolies never benefit consumers
By abhaxus on 4/12/2007 10:01:21 AM , Rating: 3
Except this isn't a monopoly. It is a monopoly on satellite radio. But satellite radio is competing with a few "free" services: namely broadcast radio, but also things like mp3 players have kept satellite radio from being widely accepted. I personally don't care for the audio quality on either service so I've stayed away for that reason. XM/Sirius will never get off the ground while they are not able to provide a one stop shop for content. Even if they raised the price to $15 or even $20 a month over the current $13, it would be less than the price of having both services.

RE: Producer monopolies never benefit consumers
By GoatMonkey on 4/12/2007 1:54:50 PM , Rating: 2
Think about that as you adjust the rabbit ears on your TV. What?!?! you don't have any? Weird.

RE: Producer monopolies never benefit consumers
By abhaxus on 4/12/2007 4:43:49 PM , Rating: 2
I have a set of rabbit ears for my PC which has an ATI HDTV wonder card. The situation is completely different for broadcast TV vs radio, as radio is primarily used in the car, while TV is almost entirely used in homes. There's no option to run a hard line to your car for better reception and more channels :)

RE: Producer monopolies never benefit consumers
By GoatMonkey on 4/13/2007 8:26:57 AM , Rating: 2
You're right, it's not exactly the same as cable vs. broadcast tv, but there are similarities.

At this point you have the option of HD radio or standard radio or an MP3 player. The market for music is a little different than for TV since you can listen to the same song many times without getting bored with it.

Satellite radio currently has the same draw to it that cable had back in the 80's. You get some features that other options don't have, primarily, no commercials (usually), and content that is not available elsewhere.

Once satellite radio has built up it's user base it will start to become normal for everyone to have it. I mean, if you went to someone's house and all they had was an ATSC antenna and couldn't get ESPN you'd be a little disappointed on game day.

I think the topic of the article is correct, in the short term anyway. Joining the two companies will benefit consumers for a while. However, long term it will be bad for consumers from a cost perspective. I have to admit that I like the idea of being able to get every channel in one place though.

RE: Producer monopolies never benefit consumers
By masher2 on 4/13/2007 10:40:50 AM , Rating: 4
> "Once satellite radio has built up it's user base it will start to become normal for everyone to have it"

I don't believe this will ever happen. There's a lot of people such as myself who just don't listen to the radio period. Even if it was a dollar per month, I wouldn't buy it. I might consider it if the radio and subscription were both totally free...but even then, I doubt I'd be bothered to get it.

There are even more people who are slightly less disinterested...people which might pay $5 or even $10/month, but who most certainly wouldn't keep the service if a monopolistic provider began to raise prices. The total value of in-car audio entertainment just isn't that high...and there are too many other ways besides sat radio to get it.

RE: Producer monopolies never benefit consumers
By h0kiez on 4/13/2007 2:05:25 PM , Rating: 2
Maybe he should have said "most people" instead of "everyone". Not "everyone" has cable TV, but the vast majority of people do.

By masher2 on 4/13/2007 4:14:37 PM , Rating: 3
> "Not "everyone" has cable TV, but the vast majority of people do. "

About 65%...which is a majority, but not a 'vast' one. And my point was that 65% of the population will NEVER own satellite radio, not if its priced at anywhere near its current price level.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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February 19, 2007, 4:07 PM

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