David Rehr on the Sirius-XM merger

He’s right.

SatRad companies have been trying to tell us for years that they are different, BETTER then regular radio and IPODS with their commercial free music, "un”censored talk and huge selection. Then all of a sudden they want to merge and tell us that they are the same as IPODS, and terrestrial radio.

If being in the same market warrants a monopoly, then couldn’t all the terrestrial radio companies merge as well as the MP3 player companies? Then you would have a choice between 3 companies. The SatRad Company, the Terrestrial Company, and the MP3 Company. Are these three choices fair to the consumer?

Now tell me, if you want commercial free music, uncensored talk, and a huge selection, broadcast over the air then what are your options? You wont get that from the terrestrial company or the, MP3 company.

I know were all SatRad fans, but let’s be honest. What XM and Sirius are trying to sell the public is a joke and they know it. They just cant except that they are failing and trying to blame the market for their losses.

Maybe a merger will form a better company in the end, but if I am unhappy with the new SatRad Company, then I wont be able to get that type of service from someone else. Certainly not from terrestrial radio or MP3, and that is the essence of a Monopoly.

mFp

First, the more goons like the NAB and RIAA talk, the more I'm convinced the merger is the RIGHT thing to do -- if they're that worked up, I figure there must be something good about it that they can't stand. After all, their track record on how good the music and radio industry is right now is about as good as Bush's track record on Iraq is.

But aside from that, what I want to know is how they can keep yammering that there's a monopoly when, in the story right underneath this one, there's a NEW satellite/WiFi company that's getting capital, that's getting good reviews, and that's getting ready to compete head-on with Sirius/XM or Sirius and XM. How is that possible if there's a monopoly being threatened? There's no logic to it at all.

Mfp - A most excellent comment, and you are exactly right. Mel wants to have it both ways -- Satellite Radio is a new and exciting product, a "duopoly" (by his own reckoning), yet merger of the two won't create a "monopoly". What bull.

Sirius supporters are behind the merger because

-- Mel says it is good, so it must be;

-- If you subscriber to Sirius and not XM, you naturally believe that Sirius is what satellite radio has to offer, and that really isn't so much better than these other alternatives. Many XM [only] subscribers recognize that there is no alternative to what they're getting;

-- Sirius NEEDS a merger to survive.

Thanks for the compliment Stack Pointer. Im am an XM sub, and im not to fond of Siruis (nor XM these days for that matter), however I am trying to be fair here.

Both companies need each other to survie. Theres simply not enough room to divide the market. Niether comapny will become profitable as long as the other company exists. Siruis will continue to drown in debt and XM will continue to lose out in retail share.

Thats all great, but failing as a business does not warrent a merger! Mergers are blocked to protect the consumer not the business.

If these 2 companies want to survive they should be talking to larger terrestrial companies. Sell themselves to CBS and Clear Channel. Not saying that would be good for the consumer either but at least well still have a choice!

I disagree I think they could survive without the merger. As time goes on and both companies expand they will take over different markets and offer better innovations. It wont just be sat radio anymore, but a variety of technological advances.

Also what happens if one company bankrupts? The other can buy them out? Then what isnt there one company in the sector?

> there's a NEW satellite/WiFi company that's getting capital

The only problem is it ISN'T like XM and Sirius in that there's NO LIVE CONTENT. It's music only (and one comedy channel), it cannot replace what I get from satellite radio - just my MP3 player.

...and what is stopping another group from launching their own SatRad company? Nobody including an XM/Sirius combo has exclusive rights to the SatRad industry, rather other companies are just afraid to enter the market without major sports or broadcasters. Being trailblazers in the SatRad industry should not be held against XM or Sirius or their future business decisions. Where are the complaints against the NFL, NBA, NHL or MLB? They all have a large portion of the professional sports pie..are they to be considered monopolies just because they have the money, talent and brand recognition while other start up leagues do not?

The FCC and the US government will be even more of a joke if they shoot down this particular merger.

Whether or not the merger would be good for consumers is debatable and primarily based on conjecture - but is an undeniable fact that in either case, satellite radio will still have competion.

How many people have you heard say, "Why do I need satellite radio when I have 10,000 songs on my iPod?" or "Why do I need to pay for radio?" I listened to free internet radio and terrestrial radio before I finally started subscribing, and it wouldn't really bother me one bit to go back if I had to. And millions of other people are satisfied with listening to cell-phone radio. Each of those technologies have significantly more listeners than satellite radio. And we can even go further with the upcoming Slacker device, though that is a relative unknown at the moment.

There are some people (such as the people who are passionate enough to post on Orbitcast) who don't think that the other options for audio entertainment are sufficient to get you through your day. But most subscribers (like myself) would have no problem going back to using some combination of free radio, mp3's, CD's, cell-phone radio, and internet radio, which are all cheaper than satellite radio.

Ask yourself this: where do the 50% of OEM trial subscribers that cancel go? How about the 2.5% that leave every month? Do they travel around in their car in complete silence after they cancel their subscriptions? If satellite radio is an irreplaceable product, how is the 95% of the population without satellite radio getting by?

Satellite radio definitely has tangible benefits over other mediums (as well as some drawbacks), but the simple fact is that not everyone values those benefits the same. Just because you think that it is a better product, that does not mean it doesn't have competition.

I really like Chipotle, and nobody else around here offers burritos like that. I don't like the local alternatives at all (Subway, McDonald's, etc.) Is Chipotle a monopoly?

Ridley Motorcycles is the only company that makes fully-automatic cruiser-style motorcycles. Is that a monopoly?

Or a more appropriate analogy: Before Blockbuster got involved, NetFlix was the only online/mail-order movie rental company. Was that a monopoly, or did they still have incentive to improve the service to attract and retain subscribers?

If Sirius and XM merge, will they still have incentive to do what it takes to attract and retain paying subscribers? Or is the competition so terrible that everyone will flock to satellite radio no matter what the monopoly decides to do?

Excellent examples JB. I wish we could get your posting to Congress.

*golf clap for JB

great post JB.

EXPLAIN how one company going under helps ANY consumers? Its okay for people to be against the merger but some of your reasonings only make your slips show.

Personally, I'd like to see the two companies merge. As separate companies, they are hindered by limited bandwidth and exclusive contract battles, and their resources for improving content and hardware are limited by their current financial situation. It is my opinion that as a stronger merged company, they could address these issues and make a more compelling product for existing and would-be subscribers.

There might be decent reasons for opposing the merger, but the "monopoly" theory is not one of them. Given the current state of the industry, satellite radio simply does not have the power to screw their existing subscribers. Yes, they provide a combination of content and convenience that some people prefer over the alternatives, but that does not make them a monopoly. In fact, that's the entire point of competition - it forces companies to differentiate and innovate in order to survive. If companies are automatically marked as a monopolies just because they offer something that nobody else provides, then you could argue that just about every company is America is a monopoly in some way or another.

Just like A.M., Just like F.M. XM Radio. And coming soon the new and improved Sirius/XM even more like free radio than ever before... The only thing missing is Clear Channels involvment... Hey wait, that will be next..

Special K should dye his hair black or his eyebrows white. Maybe the FCC will actually believe some of his smoke-and-mirrors bullshit about pricing and programming if he stops walking around like some vaudeville magic act.

If Sirius/XM became more like free radio, why would anyone pay for it? If they raise prices and cut programming, how are they going to get more subscribers?

What Mel promises about the merger shouldn't matter. What should matter is the fact that raising prices and cutting programming would make terrible business sense for the company. They need many more subscribers to survive, and cutting the value of the service is not a good way to attract and retain paying customers.

What should matter is the fact that raising prices and cutting programming would make terrible business sense for the company.

WHY DO YOU PEOPLE NEED 14 TOP 40 CHANNELS? So what if they cut redundant channels? What are you really losing? NOTHING! STOP CRYING ABOUT PROGRAMMING BEING CUT! Doubling the number of existing genre channels makes terrible business sense.

Sirius has 6 Hip-Hop/R&B stations. XM has 7. Do you really need 13 rap channels?

They both carry CNN, BBC, and FOX news. Why have 2 FOX news channels broadcasting the exact same thing at the exact same time?

You dumb fucking chicken littles and your "OH NOES THEY WILL CUT THE PROGRAMMINGS DURRRRRR" need to go abck to DeVry and demand a refund on your business degrees.

ok, that was funny just for the DeVry reference.

BTW, I was on the fence with this merger until I read JB's post. That's really does say it all. Great post man.

I agree with you Farley - they should consolidate identical channels to free up the bandwidth for better sound quality or new content. But it will be several years before they will be able to do that since the current systems aren't compatible. Before they either A) develop a common system or B) give everyone dual-mode radios, they should be careful about messing with existing channels to accomodate content from the other service.

The point I'm really trying to make is that I don't understand why anyone in their right mind would think that the merger will suddenly give Sirius/XM the power to screw subscribers. Satellite radio is not a must-have product like cable or satellite TV, and Sirius/XM will have to fight to get enough subscribers to survive, regardless of whether or not they merge. The fact that they offer more live content than the competition does not give them the power to cut quality and jack up rates without repercussions (i.e. cancellations), and management is smart enough to realize this. This is why Mel said he's more interested in reaching out to the 95% that don't have satellite radio instead of trying to squeeze a couple more bucks out of the existing subscribers.

And don't forget they're adding video channels, for the kids.. Three channels of cartoons they can ignore while bothering you with "are we there yet?"...