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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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By Oregonian2 on 4/12/2007 1:34:31 PM , Rating: 2
quote:
First of all, you have to remember that both companies are hemorrhaging cash badly. If SOMETHING isn't done, one will go out of business and there will be a monopoly on satellite radio regardless.


I agree that before very long there will be only one exactly as you have stated for the reason you stated (I actually agree with you most of the time masher2).

However it's more likely we'll have none whatsoever, IMO, because the damage already done will likely do away with the survivor as well. About the only way that one will stay long term would be if the "last" one can cancel/renegotiate its contracts when under bankruptcy proceedings while simultaneously still being able to get financing for its continuing losses. They've still got to compete with a hundred million iPods and free broadcast radio. :-)

P.S. - I always find it amusing to see the comments (not by masher2) about how companies are always doing horrible things so they can increase profits (for their wealthy owners) -- when in reality the companies (such as these) are losing money hand over fist trying to prevent their death. Possibly losing retirement savings money that an aggressive fund in our 401K has invested. :-)


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