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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 masher2 on 4/12/2007 1:25:08 PM , Rating: 2
> "It's commonly applied to transport systems and utilities that require extensive infrastructure building...Sat radio doesn't qualify..."

Oops, the "natural monopoly" term is applied to any industry where entry costs or economies of scale are such so that one only firm is able to profitably survive.

In fact, this is the reason why utilities and transport systems are judged natural monopolies. Two subways systems couldn't survive in NYC...the costs of two separate sets of tunnels and tracks would be far too high.

> "Markets self-regulate much better than any gov't bureaucrat"

They sure do...and the market in this case wants to merge. Regulation is preventing them from doing so.

RE: Producer monopolies never benefit consumers
By jskirwin on 4/12/2007 2:20:02 PM , Rating: 2
A monopoly provider couldn't raise prices with impunity...people would simply tune them out and listen to other options.

Then they aren't a monopoly... I think we're getting caught up in semantics here. I have nothing against the merger and in fact support it.

My beef is with the statement "monopolies benefit consumers". Monopolies CAN benefit consumers, but only if they are regulated - and there is no guarantee that in the end consumers will be better off.

By masher2 on 4/12/2007 2:39:05 PM , Rating: 2
> "Monopolies CAN benefit consumers, but only if they are regulated..."

I have to disagree here. In nearly all cases, a natural monopoly (i.e. one not mandated by government fiat) benefits the consumer...with or without government intervention. I can point out numerous examples of such, going all the way back to Standard Oil. When it was broken up, oil prices (which had been been steadily declining for decades) immediately rose, and stayed artificially high for many years. Or the case of aluminum, where Alcoa was carved up via antitrust legislation, and the less efficient firms caused prices to rise as well.

Finding a case where a non-government mandated monopoly breakup actually benefitted the consumer is considerably more difficult. But I'm willing to hear any examples you might raise.

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive
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Unabridged Interview with Noah Samara
April 12, 2007, 10:00 AM
Sirius and XM to Merge in $13 Billion Deal
February 19, 2007, 4:07 PM

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