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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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The merger will be bad for consumers.
By 91TTZ on 4/12/2007 12:57:39 PM , Rating: 2
We're currently getting a lot of product for a decent price. If the companies merge, the price will quite obviously be increased for the same level of service. Do you really believe that you'll get what you're getting now for the same amount of money?

Also, the channel lineup will suffer. The efficiency gained by merging will come in the form of eliminating redundant jobs. Keeping all of their stations wouldn't make sense for a newly merged company. Instead of having 100 stations on Sirius and another 100 on XM, they'd likely merge it into a unified set of stations that they broadcast to both kinds of receivers. So whether you have an XM receiver or a Sirius receiver, you'd be getting the same stations.

In addition, they'd definitely break the lineup into tiers so they can raise prices. They'd offer a "standard" tier for the same price you're paying now, and then higher level tiers with premium content. Of course much of that "premium" content will be stations that the average listener currently listens to, increasing the chances of them subscribing to the more expensive plan.

By masher2 on 4/12/2007 1:05:06 PM , Rating: 4
> "We're currently getting a lot of product for a decent price..."

For now, sure. But companies that lose money don't stay in business forever. What happens when one (or both) simply go belly-up?

> "If the companies merge, the price will quite obviously be increased "

Why do you believe this? A merged company will have less overhead, more users to amortize that overhead against, and (most important of all) won't have to outbid their competitor simply to buy programming. Sirius and XM have spent several billion dollars to buy rights to the NFL, MLB, Howard Stern, and other content sources.

In fact, its quite possible that a merged company will, once it consolidates it costs structure, opt to drastically reduce pricing, in order to dip into the vast untapped market of people who would rather listen to terrestrial radio rather than pay $13/month.

"Well, there may be a reason why they call them 'Mac' trucks! Windows machines will not be trucks." -- Microsoft CEO Steve Ballmer
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Unabridged Interview with Noah Samara
April 12, 2007, 10:00 AM
Sirius and XM to Merge in $13 Billion Deal
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