I can't imagine that you haven't heard but, just in case, you should know that, earlier today, Sirius and XM satellite radio announced plans to merge. I don't know about you but, as for me, I'm hoping that the regulators governing such things see fit to allow the merger. There's always the chance that they won't. There's an FCC provision, for example, that specifically forbids the two companies from combining and the deal must also gain approval from the Department of Justice; because of antitrust concerns.
Personally, I think convincing arguments can be made that would satisfy both the FCC and the Department of Justice. In an earlier statement, FCC Chairman Kevin J. Martin said that " the companies would need to demonstrate that consumers would clearly be better off; with both more choice and affordable prices". Well, assuming that programming, currently exclusive to one company, is provided to subscribers of either, there's nothing but upside for you and me. In order for me to hear broadcasts of both the Minnesota Twins and the Indianapolis Colts, for example, I'd have to subscribe to both XM and Sirius. If the merger goes through, I'd be able to hear both for the price of a single subscription. That, in my book, makes me "better off; with both more choice and affordable prices".
It‘s, obviously, far too early to speculate what
the deal might mean for subscription prices but the merger could bring down overall operational costs while, at the same time, increasing the pricing power of the resulting company. That would be good for investors and, because the merged company would be more stable, good for consumers, as well. The problem will be in convincing the Department of Justice that consumers won't become the unsuspecting victims of a satellite radio monopoly that continually raises it's price.
The argument against that happening, and the argument most likely to convince the DOJ, is that, as things now stand, the two satellite radio entities are competing with each other as well as terrestrial radio and a growing number of digital audio sources like MP3 players, mobile phones and, even, terrestrial digital radio. Eliminating the competition between the two satellite radio providers will, in no way, eliminate audio competition; which should keep prices low.
"We are excited for the many opportunities
that an XM and SIRIUS combination will provide consumers," said Gary
Parsons, Chairman of XM Satellite Radio and Hugh Panero, CEO of XM
Satellite Radio, in a joint statement. "The combined company will be
better positioned to compete effectively with the continually expanding
array of entertainment alternatives that consumers have embraced since
the Federal Communications Commission (FCC) first granted our satellite
radio licenses a decade ago.""This combination is the next logical step in the evolution of audio
entertainment," said Mel Karmazin, CEO of SIRIUS Satellite Radio.
"Together, our best-in-class management team and programming content
will create unprecedented choice for consumers, while creating
long-term value for shareholders of both companies. The combined
company will be positioned to capitalize on SIRIUS and XM's
complementary distribution and licensing agreements to enhance
availability of satellite radios, offer expanded content to
subscribers, drive increased advertising revenue and reduce expenses.
Each of our companies has a strong commitment to providing listeners
the broadest range of music, news, sports and entertainment and the
best customer service possible. We look forward to sharing the benefits
of the exciting new growth opportunities this combination will provide
with all of our stakeholders."
There are a number of other potential benefits to the merger. For example, a number of truck and auto manufacturers have struggled with the decision of which satellite radio providers equipment should be offered in their vehicles. With the merger retailers will have "the opportunity to provide a broader content offering to their customers". I think a lot of people have avoided making the move to satellite radio because the radios themselves are only compatible with a single satellite radio provider; if they find they've made the wrong choice they'll have to buy new equipment. The merger will eliminate that concern and, I think, usher a whole herd of new subscribers into the world of extra-terrestrial radio.
Additionally, according to the press release, "the merger will enable the combined company to develop and introduce a wider range of lower cost, easy-to-use, multi-functional devices through efficiencies in chip set and radio design procurement." In other words, the radios should be both better and cheaper.
I guess you can tell; I'm hoping this merger happens. Besides providing better programming choices at about the same price, better and more innovative radios at a reasonable cost, I believe the merger may be the only chance that satellite radio has to survive.
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