XM and Sirius extend merger deadline, blame FCC for not understanding their love
By Nilay Patel 
posted March 1st 2008 3:38AM
posted March 1st 2008 3:38AM
posted March 1st 2008 3:38AM
A look back on popular stories from today in a specific year.
Now that we've thrown 'em off the trail, use the form below to get in touch with the people at Engadget. Please fill in all of the required fields because they're required.
Apple has to milk the world dry with the EDGEtastic iPhone first. They they will release the 3G version. But not when the world is ready. When Apple is ready. Either that or that can't figure out how to make
What? Can you tell me how that relates to the article?
" the iphone has been sitting in its room in a very deppressing state. It's friends want it to change and go faster but its parents want it to wait. What will happen next on Silicon Valley Stories"
It relates because of DRAMA!:P
How is this even legal? I'm sure this has been asked before but, wouldn't this create a monopoly?
It wouldn't. Satellite is in direct competition with broadcast radio, iPods, internet radio etc. Why else would the NAB care enough to spend boat loads of money in ads trying to nix the deal if they weren't afraid of a stronger competitor?
Satelite radio competitors: terrestrial radio, ipods, cds, tapes, 8tracks
Yes it would. If you want Satellite Radio you would have only one option. THAT IS A MONOPOLY!
Just do it already FCC.
Reason for the mergers are, competition is stiff and its very difficult for either companies to survive unless this merger goes throw. When i say competition, im saying such things as podcasting, over the air radio, even HD Radio. Also when the time comes, Wifi or wireless internet will be everywhere. thus allowing internet radio to survive. Its better that they merge if not the cost of deploying this product is astronomical for each company.
FCC, respect mah authoritah!
You're right
Most people consider Satellite radio as its own separate industry, but it's forced to compete against any other form of audio broadcast technology, both live and prerecorded. Sirius and XM won't be able to exist on their own once other sources of music and radio emerge to the general public (HD Radio, PMPs in vehicles, Podcasts, etc) in as large of numbers as satellite radio has so far.
The only reason I really have satellite radio in my car to begin with is because it came with the radio package on my car. When HD radios and auxiliary come to the majority of vehicle radios and the general public fully understand how to use these technologies, satellite radio subscriptions will start to go down.
The only problem with that logic is that it would set a precedent for all sorts of screwy mergers. Wells Fargo, Washington Mutual and Bank of America could decide to merge on the idea that there is a lot of competition from "other" financial institutions, like brokerage houses.
Or Microsoft and Apple should merge because of competition from Symbain and embedded linux, on the argument that there are many more installed devices that run these two OSs than desktops running windows and mac OS.
And besides, the law that created satellite radio clearly said that there were to be two companies.
Dish and Direct TV compete successfully with cable and OTA TV, so what's the problem with sat radio? It can't all be iPod related. Maybe because the only ads I see for them are Sirius, and really don't tell me anything about the service? Maybe because the cheaper plans require you to pay 3 years up front? Maybe because Sirius' niche channels sound just like top 40? Maybe because XM's niche channels break their formats every day at 10am for 2 hours? Maybe because Howard Stern's appeal was to see what he could get away with on FM, and saying "boob" on a Sirius adult channel doesn't have the same effect.
Don't get me wrong, I think Sat radio is a great thing, but there are big problems with it, and they aren't because of the iPod, or that they are too weak to compete.
@Eric - But Exxon and Mobil can merge no problem because at the time we were told maybe 20 years in the future there would be alternative, clean, renewable energy and they just had to hedge their bets while they still could?
Eric is quite right here brodie. Yes, there were all sorts of "excuses" given why ExxonMobile was allowed, but the reality is (and even though I thought THAT merger was wrong), there are at least others in their DIRECT industry as well.
Nobody else was allowed a Satellite Radio license, because there was to be "only" two companies to be allowed to do this. (Presumably so as to not dilute the fledgling industry I am sure). Yes, Satellite does compete with other broadcasters, but the reality is, they have both spent like Pre dotBomb companies, hiring "talent" at way to high a price for the subscriber base they have.
Yes, it was well known that Sirius picked up many subscribers when they signed Howard Stern to a contract... but did they sign up enough to warrant the lucrative deal they gave him? Are these the people that bought one inexpensive device to listen to Stern, and not the type of customers that would perhaps buy either several different devices (home, auto, mobile).
Simply put, they have a single pricing plan, and they could not afford to offer "premium" (if you want to call it that) content at that same pricing level. This would be akin to DirecTV or Dish offering HBO as part of their base package. Enticing to the customer, but a money loser for the company.
As anybody who remembers pets.com or other such debacle's, you can't make up selling at a loss with increased volume. They need to fix their business plans, not merge and screw consumers.
(For the record - I don't have, nor do I plan at any point to actually pay for Satellite Radio. Howver, I would be damned to ignore this, and as has already been stated, allow this to be the precedent for a whole bunch of kooky mergers based on the theories offered here in justifying this merger)
@Eric
Your example of bank mergers is quite poor considering there are actual formulas (10% national or 25% local with regards to deposit market share) to determine whether or not the merger is considered anti-competitive. Sure a merger could still proceed but they'd have to divest to fall below those limits. So no, I doubt a Sirius-XM merger would serve as precedent.
Comparing DirecTV and Dish Network is a little loaded since until recently there was minimal alternatives when it came to video. In fact, many major metropolitan areas still suffer from cable monopolies. There are parts of NYC where its Time Warner or bust.
Competition is usually measured in terms of barrier of entry. The problem with radio is that barrier is pretty low. Today, anyone with a computer and internet access can broadcast some sort of content. With portable media players almost as common as water, that content will definitely reach someone and it will reach them at little cost. On the other hand, launching a new satellite costs billions of dollars.
The best part is the people who are so against the merger, such as yourself, have no interest in the medium whatsoever. Don't you see how much that hurts your anti-competitive argument?
The reason the merger is failing is because the National Association of Broadcasters is paying millions through its lobbyists to the congressmen involved. It's trying to STOP the merger.
So the NAB is saying that Sirius and XM are in a separate universe, and that them joining would cause a monopoly, but then they spend millions trying to stop it. They're doing that because regular radio COMPETES with satellite radio, so satellite radio is not a self contained universe.
Regular radio makes up 95 percent of the market. So obviously its not a merger, because Sirius and XM together barely make up 5 percent of the market.
Plus they hate Howard Stern because they're tools who're threatened by anything they can't control
Hey, Nilay, so which one of these two sat-radio companies is closest to being put on a death watch?
They purposely set a shorter window as a sign of faith in the merger. Setting a long window also allows the gov't weasels to sit on it even more.
Good explanation here.
http://www.ft.com/cms/s/2/406fce4c-e535-11dc-9334-0000779fd2ac.html
I'm not above praying for this to go through! I want my MLB, NFL, and Big 10 all in 1 place.
Remember the online radio streaming websites. Remember the whole deal about royalties and them screaming that they were being forced to pay the same rate as radio stations. The music industry obviously looks at online streaming the same way it looks at AM/FM radio and probably sattelite the same way too....so how all of a sudden is it a completely different non competitive industry if Sirius/XM merge.
Anf if they raise their prices they will price themselves out of the market and die. Period!
My big fear is that the merger will cause me to lose cool stations like FRED on XM in favor of lame mainstream stations like FirstWave on Sirius.
If that happens, I'm cancelling.
Sirius is fine for the white-trash/NASCAR set, but I have no interest in the majority of their channels.
Yes, "white-trash", that's why they have the only all-LGBT radio station: http://www.siriusoutq.com/.
Hey, there's white-trash LBGT too. I've met many. I didn't know they were mutually-exclusive.
The NAB are bunch of idiots.
This makes absolutely no sense. If the NAB didn't actually believe that this was a monopolistic move, then why bother? As competition, (which you point out amounts to 5%) they are barely a blip on the NAB radar as far as "competition" is concerned.
And the NAB is hardly alone in disagreeing with this merger... on the same monopolistic grounds. So, what are they doing, buying off the Wall Street Journal and others as well?
And for the record, nobody is threatened by Howard Stern, except perhaps in the past, the radio stations that hired him, since they were the ones that had to pay the fines for Stern's indiscretions. Especially now that he has relegated himself to a minor market on Satellite, his relevance to anything is nominal, and his impact on anything other than Sirius' earnings is non-existant.
"This makes absolutely no sense. If the NAB didn't actually believe that this was a monopolistic move, then why bother? As competition, (which you point out amounts to 5%) they are barely a blip on the NAB radar as far as "competition" is concerned."
Actually that makes no sense. If they are a blip as far as competition goes, then why spend all that money for fear that Satellite will become a monopoly? What's in it for them? Surely their motives aren't altruistic. I mean why wasn't the NAB advertising against other mergers, such as those in the oil industry and such? Why would they give a rats patootie over a merger that they are "saying" doesn't effect them competition wise?
Broadcast radio is hurting now. Affilates that carried Stern have plummeted in the ratings. Other stations are hurting from competition from people choosing the plug in the music from their iPods or anything else that gets them away from the blathering DJ's that talk over songs and endless commercials.
The NAB are fearful, not that Satellite will beat them, but be yet another nail in their coffin. A merger will make that nail even bigger.
We are not talking about the same thing here (admittedly I was not clear). "Satellite" (industry) IS competition to broadcast radio. This is correct. The fact that "Satellite" services are a separate entity is also true.
The similarities can be compared with the Cable Industry (yes, I know there is some overlap, but bear with me). Cable Channels (i.e. TNT) initially were not considered "real" competition to over the air broadcast stations, because their viewership was limited, by the small number of cable subscribers. This path continued many years. And while it never got to the point of a single monopoly, the cable beast that is today Cablevision, Comcast and Time Warner that have taken out the vast majority of the smaller cable companies, then basically conspired to their own ends to beat out the OTA stations.
The NAB, would probably like to avoid this same scenario, which would be why they would not want a single, uninhibited monopoly to control the INDUSTRY that may rise up against it later.
TO sum, they don't fear the entity per se, they fear the industry that would be controlled by a single entity.
In my understanding of this merger, the direction NAB is with going against this is that they are taking the customer's side... When XM prices change, Sirius is soon to follow, and vice versa. If XM and Sirius merge, there's no other satellite competitor, and they could keep driving the price of subscriptions up. Of course, that would be a bad move if you're the only satellite radio company.
It's the same as any other subscription service, there's just more competition in those other services.
If the NAB is saying it is taking the customers side, then it rings hollow. If they state that subscriptions will go up, then it would only drive them away from satellite and back to broadcast. They should be rooting for the merger.
I never believe a lobby group when it says it is looking out for the consumer.
LC is completely right. If this merger does not serve as competition to regular radio then WHY is the NAB spending millions trying to block it?
Obviously they're doing that because they DO compete with Satellite Radio, and since satellite radio makes up 5% of the market, its clearly not a monopoly.
And rob, sirius and XM have already pledged to congress that they will keep prices low. The way things stand now, both companies are losing so much money they'll be out of business if they don't merge. Plus having one satellite company means that people don't have to choose between NFL and baseball and so forth. With one satellite compnay, people can buy one radio and get all the coverage, rather than having to buy two radios if they're interested in more than one sport.
It only seems like a monopoly if you think of satellite radio as SEPARATE from regular radio. Its not. Its the same medium competing for the same type of listeners.
"The way things stand now, both companies are losing so much money they'll be out of business if they don't merge."
Not only that, but one could fail and you would have one Sattelite company by default. One that would be financially weak since they wouldn't have the others assets and be forced to raise subscription costs..
So tell me NAB. How would that benefit the consumer?
This is a pathetic. The politicians are just stalling while hoping one of these hemorrhaging companies goes bankrupt. I recommend watching the 12 minute rant by Jim Cramer.
XM-Sirius Merger: Cramer Names Names
http://www.cnbc.com/id/23338039/site/14081545
Very simple. NAB, Georgetown Partners, Apple, Microsoft... whomever, can buy the other frequency!
Geeeeeze, it's not that hard now, is it?
DoJ, FCC - step aside.
"they know nothing!" - Jim Cramer.
sure question if this is a monopoly, but don't question the oil companies, the cable companies, the phone companies, etc etc when they merge.
this is a waste of time and space for anyone to honestly be debating this, when they let one person buy up most of the us's media.
approve already.
off the article, i have to say that picture made me do a double take. Bravo guys! Seriously, i think engadget is getting more snarky and non-sequitor every day...sniff...they grow up soo quick
Speaking of satrad, don't miss Ron & Fez, noon to 3, XM202.
I've not tuned into a terrestial radio station in the last 3 years (the GF does, but she has issues). And even if both Sirius and XM was to bite the dust I still wouldn't tune in. My time now is split between satellite radio and the iPod. Between the two I'm listening to exactly what I want when I want. And I'm not spending the last leg of wherever I'm driving listening to commercials.
Being a Sirius stock holder your damn straight I want the merger to happen. Being both a Sirius and XM subscriber I also want the merger to happen.