One year after XM and Sirius proposed a merger, the Department of Justice has finally given its blessing. The companies are heading down the aisle. Last year, I argued that a merger was in everybody’s best interest. After reading my column carefully, it's clear that the DoJ agreed. Its analysis showed that a merger would not violate anti-trust laws because there is already significant competition in the market from other options such as portable music players and increasingly prevalent mobile Internet radio. Even good old-fashioned (and free) AM/FM radio is a competitor, and we all know who holds the cards in that market.
As with anything newsworthy, the proposed merger has stirred controversy. Some folks feel that it would violate antitrust laws, and conflict with the FCC’s original licenses issued to the companies with the stipulation that they would never merge. “Never” apparently meant “not for a little while.” We’ll see what happens with the FCC in the coming weeks, but analysts predict that it will follow along with the DoJ's ruling. Like it or not, the lobbyists can go home. It’s probably a done deal. With the FCC ruling just days away, click Continue to read about what a merger mean for us.
Nuts and Bolts
Assuming the FCC approves Sirius' buy out of XM, what happens to current subscribers? I’ve got XM in my car, XM at home, a portable device and a boombox — to say nothing of all the T-shirts and tote bags. Will XM as we know it continue to exist? Well, yes and no. The names of the services will most likely change into one cohesive name. Anyone care to suggest a few? That’s cool. I can deal with owning some obsolete, um, ebay collector’s item XM mouse pads. But what about my XM radios, not to mention that factory-installed XM in your new Ferrari Scaglietti? No problem — the satellites won’t be shot down from the sky, and your radio will continue to work. XM customers will continue to get XM through the same broadcast chain “pipeline” as they do now — same codecs, same satellites, same receivers, and the sound quality we love. What will change is the programming.
Oprah and Howard, NASCAR and MLB
While programming options are still up in the air, it’s obvious that both XM and Sirius fans will get greater choice. Sports fans, in particular. Let’s face it— Howard Stern (on Sirius) has a mostly male demographic. Those same male listeners probably also want to listen to baseball and the NHL (on XM). Prior to the merger, fans had to choose Howard or hockey. Now, you can have both. No one knows what the merged conglomerate’s pricing plans will be, but a la carte programming might yield basic subscriptions for just $6.99/month up to $16.99. That’s compared to the basic $12.95 fee each company charges now. Additional fees apply for “premium” programming. Plans and bundles could be customized, letting you create just the programming you want, so you can pay for only what you want. Currently, you could also get all satellite radio programming by subscribing to both services, but this would set you back over $25 a month.
The new pricing plans could significantly benefit listeners. Or at least it won’t be any worse. According to an online press release from XM, "Subscribers who want their current service after the merger will not have to pay any more than the $12.95 per month they pay today." In fact, it’s likely that the FCC will enforce price caps to limit price gouging by the new monopoly. The concern that the new company would raise rates seems far-fetched. There are just too many good alternatives for car, home and mobile radio.
Avoiding a bloody format war
If the companies had continued down separate paths, desperately trying to beat each other to death with lucrative exclusive deals, expensive advertising, and dual-licensing, odds are pretty good that one or the other (or both) would have gone belly up. Even with a combined total of over 17 million subscribers, neither company has yet turned a profit. In the situation of one of them folding, at least half of satellite radio customers would have been screwed with obsolete hardware. Perhaps hardest hit would be car owners with integrated, and useless, receivers.
Consider — would you rather have one semi-successful company spending money on better programming and technology, or two struggling companies spending money trying to out-do each other? Look at what just happened in the home theater market when HD DVD lost its battle with Blu-ray. In that situation, consumers were left with useless hardware and no new material to support it. With the merger, XM and Sirius hardware will both continue to work, with more programming options, not less. The merger's a win-win for everyone.
What do you think?
How do you feel about this? If you’ve put off buying satellite radio, will this change your mind? Will you pay more for expanded programming options? Will you be tempted by a lower price for basic channels? Would you listen to Opie & Anthony making fudge with Martha Stewart? Personally, I would pay good money to hear Howard Stern guesting on Oprah, especially if he jumps up and down on the couch with her. Now
that's what I call good radio.
By frunkis69 at 9:19 PM ON 03/27/08
O&A and stern on the same satellite yuck I'll do like i do with a coke machine with pepsi in it and ignore howard, hoo hoo robin
larry from fixmywindshield.com
By MUSICGIRL1079@AOL.COM at 9:21 PM ON 03/27/08
LISTEN ALL I CARE ABOUT ARE MY COUNTRY STATIONS CAUSE WE HAVE NONE IN NEW YORK AND MY OPIE AND ANTHONY. O&A XM 202 THE VIRUS. I DON'T WANT TO LISTEN TO HOO HOO!
By LOWRYDER at 3:11 PM ON 03/28/08
It dont a make damm to me as long as Opie & Anthony are on Xm 202 along with Ron & Fez if not like Anathony says GO SCREW and then I will turn off sub
By mikeeeee at 4:56 PM ON 03/28/08
you forgot the fcc approval, still pending.
let's see if karmazin has enough juice to get over that hurdle.
By Test123 at 9:18 AM ON 03/29/08
Also you fail to mention, in order for A La Carte to work you will need a new dual band or so called Next Generation receiver. Right now and for the foreseeable future there is no such thing.
It was reported a day or two ago that it will take at least a year for add on Next Gen receivers to be made available and 3 to 5 years for them to show up built into cars...
So...if you want to hear Howard and Oprah you will still need two receivers.
t123
By caritas at 3:44 AM ON 04/03/08
I don't really care about Howie or Opie.... I actually was interested more in EWTN, believe it or not.... and Christian radio stations. Can't get that on local - except for a few really bad AM stations that are fuzz out at night.... if the merger keeps the hardware up and running, then great! Can we put a block on Howeie?
By shrekjdr at 6:59 AM ON 04/03/08
As long as XM 204 Homeice stays its fine by me. As well they can keep Flight 26. For anything else they change is as long as I get my Hockey fix!
By Merlin at 9:16 AM ON 04/03/08
The gross stupidity of spending money on Howard Stern was one reason I left Sirius three years ago. The ubiquitous and equally idiotic O&A who say the same stuff over and over again is offset by MLB and good music and talk options they offered. I can continue to avoid the ones I don't like. Ala cart sounds good but we shall see. In the end the merger will be good for us. I suspect the satellite TV companies will like it as well.
By Imjack at 10:04 AM ON 04/03/08
Howard is the only reason I went with satellite and the only reason I'll stay with satellite.
By gablesmale at 10:44 AM ON 04/03/08
I have just one question? If the merger goes through would it be a good idea to get a Sirius account now and pay for the lifetime option so I lock in any future increases in fees? I currently have XM and I am very happy with there service.
By zhor at 12:24 PM ON 04/03/08
I just want to know if DirecTV is going to add more channels or just take a few of the XM stations they carry and replace them with Sirius programming.
By rsmas at 5:38 PM ON 04/03/08
O&A all the way. Reason I went satelite was to get away from Howie! But "they keep following me. I'm a better than Marconi Robin..."
By wehitandrun at 10:01 AM ON 04/04/08
O&A. Ron & Fez. All that matters.
By ghosty191 at 2:26 PM ON 04/04/08
I've had Sirius for years, and can't live without it. There is one station on XM I listen to online, that I would like to see on Sirius, but maybe now I might have the best of both worlds. I just worry about the cost of a unit to listen to both frequencies might be, along with having to replace the 4 units I have subscribed as of now.