The NAB has fired a shot across the bow in strict defiance against the Sirius-XM proposed A La Carte pricing plan, by issuing the following statement:
"Policymakers should not be hoodwinked by today's announcement, since nothing is stopping either XM or Sirius from individually offering consumers a more affordable choice in limited program packages. Moreover, after reading the fine print, one discovers that XM and Sirius customers have to buy a new radio for an undisclosed fee to reap the alleged rewards from today's announcement.
"The history of antitrust law demonstrates that two hotly-competitive companies will promise anything to become a monopoly. That, coupled with the brazen lack of candor displayed by both XM and Sirius in breaking FCC interference and terrestrial repeater rules, illustrates convincingly that this anti-consumer merger ought to be summarily rejected."
It's funny to see comments like the above one coming from the NAB. Ah, the hypocrisy.
"Nothing is stopping them" from offering A La Carte pricing now? Yes, it's called a business case. ARPU may go down as a result of this offering, but that's presumably a direct result of the merger synergies. Mel Karmazin at the NPC Luncheon today said that nearly every line on the P&Ls show a cost savings. Combine that with some economies of scale characteristics, and ta-da! you have a business case.
Then they talk about a "brazen lack of candor"? Oh lord. Here's six letters for you... P-A-Y-O-L-A.
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"...after reading the fine print, one discovers that XM and Sirius customers have to buy a new radio for an undisclosed fee to reap the alleged rewards from today's announcement."
Huh? Um...no....just the a la carte packages. You can still save $$$ by subscribing to family friendly packages, Mostly Music, etc. etc. Did they even READ the f'ing press release??
It's not the NAB's job to tell the truth.
It's their job to advocate for the members.
:)
according to the NAB, we're gonna have to buy new radios to recieve both signals?
gee, thats news. didn't both Sirius and XM come out and say previously that their current radios can be configured to recieve both signals and that its just a firmware issue?
The NAB has a couple good points in there. But it still reeks of jelousy and hatred for Sat Rad as well as bringing up the question of "Why do they care?"
NAB Guy: Hey, Ad Guy. Make me a huge sign that says XM+Sirius=Monopoly
Ad Guy: Why?
NAB Guy: Because it'll cover up any signs of credibility.
Ad Guy: But, don't we want that?
NAB Guy: ...just do your job. And start drawing up plans for a signs that'll cover up the 'We Take Cash' sign on the other side of the building.
People, People. Why all the skepticism and negativity?
Let me use an example to illustrate why our Programming Proposal is the best possible thing for me, I mean you.
Take the "A La Carte II" offering under the XM Post-Merger Line Up. You get to pick 100 channels for $14.99/month, which is 70 channels less than you're getting now for $12.95/month. We'll even let you pick "some best of Sirius" as a part of those 100 channels, but not any of the Super-Premium channels. The Super Premium channels will cost you an extra $6.00/month per channel. By way of example, you pick your 100 regular channels for $14.99/month, and you decide that you want the Howard Stern, NASCAR, NFL and NBA Super-Premium channels in addition to your 100 regular channels. That's just $24.00/month ($6.00 x 4 = $24.00) on top of the $14.99/month that you pay for the 100 regular channels. (You didn't think that any of these channels would be anything but $6.00/month Super Premium channels - did you?)
What's that? You don't want to pay $38.99/month ($14.99 + $24.00 + $38.99) for these 100 regular channels and 4 Super-Premium channels? You would rather just keep your current 170 channels of XM programming for just $12.95/month. OK, we'll let you do that for one year. After that, the number of those channels will drop to 100 for $14.99/month, and you will be required to pay an extra $6.00/month for the Opie and Anthony and MLB channels Super Premium channels. You will also be required to pay an extra $3.00/month for Bob Dylan's Premium channel. (You didn't think that you would continue to get more regular channels than the "A La Carte II" subcribers for $12.95/month after one year, did you? Worse yet, you didn't think that all of the channels that you currently recieve for $12.95/month would remain regular channels - did you?)
Last, but not least, you will need a "new generation receiver" to get the full spectrum of programming that is available at the end of one year. Because the start-up costs for producing these "next generation receivers will be high, we will need to charge $150 - $300 for these receivers, and they will only be available from manufacturers that agree to a set price and a specified split of the profits with us. Add another $40.00 the car kit and the home kit. If you decide to keep your current receiver, you will be limited to whatever 100 regular channels and Super-Premium channels that it can receive. Variety is the spice of life, but it doesn't come cheap.
What? You worry?
Don't worry, be happy.
Ryan, great post as usual, but the NAB DOES actually have a point here: Current subs HAVE to purchase a new radio to receive the packages (or a combo of XM/SIRI packages to be more precise).
The biggest kicker for consumers is the OEM market. Auto manufacturers have deals with one company. Even if they merge, will the OEM's put in the new dual-band receiver? What about CURRENT OEM's that want an upgrade? Are they left behind?
This isn't exactly the best scenario.
The FCC mandated several years ago that XM/SIRI produce (but they forgot to say "release for sale") a dual-sub receiver. This should have been done years ago. They shouldn't have had to wait for a merger to make this happen. The trasition process would have been much easier had they done this originally.
Retail is pretty much useless at this time, for most subs will wait for the new receivers. And now OEM subs may say "why bother now" as well.
And they're worried about ARPU? They should be more concerned about saving face with the current subs.
One of these companies will have to give their bandwidth up because there are supposed to be two satrad companies and when they merge there will only be one for a while, no matter what all the idiots are saying there will only be one company.. A MONOPOLY for a short time.. Then there will be a second again for a while until they do something stupid and have to be bought be the new XM/Sirius.. Count on it...
NO, the nab is NOT correct, you do NOT need to get a new receiver to get these packages. SOME of the packages, but if I want the 50 channel plan for 6.99, boom I can get it either on XM or on Sirius. Now if I want to start mixing and matching both service offerings, then YES, I'd need a new radio.
Of course, me with 3 sirius receivers and 2 XM receivers, will be buying several. :) But they'd have to do real good to replace my INNO, I just friggin love that thing.
The thing about auto manufacturers is not all of them are up to putting all of the options audio wise for the times, anyways. I bought an '05 Cobalt well in the time of iPods and satellite radio. Yet the factory stereo was basically presests, no iPod jacks, no local program info, no XM ready. Basically just a volume knob, AM/FM and tuner. Not until my radio failed twice in the car did I get a slightly better, still shitty upgrade. Still not XM ready, still no iPod jack, but I can see song titles now...big whoop. I had to put my Sirius in my car to get good listening.
But all cars have FREE AM and FM...And probably soon in HD, which will all have to be upgraded by owners now don't have it who want it. And HD Radio is free. GM's not giving me a free upgrade to HD.
Times change, technology changes, companies change. It's going to take time for post merged company to make things standard and work out whatever deals they now face through the auto market as the two companies made EXCLUSIVE deals before the merger. But you'll still have your already existing subscriptions to listen to.
Hate on the NAB all you want, but I agree with what they said. You can spin your financials anyway you want to show better numbers.
Here is what I predict will happen: Everyone can keep their current sub the way it is now. A year or 2 from now, contracts for "exclusive" or "best of" programming like Martha Stewart, Oprah come up. They keep Oprah and drop Martha - now, the ones with the sirius subscribers will get a lame substitute and need to pay the extra 2 or 3 bucks a month to get Oprah.
Some of the exclusive programming will have the upper hand for bargaining. MLB for example, knows that they really won't lose much by leaving satellite radio and now, but xm/sirius will. They can demand any price they want
My biggest concern is in my car. I have an OEM XM radio with controls integrated into the steering wheel. It looks like I will be stuck with just XM in this car unless I purchase a 2nd receiver for Sirius. If I purchase a 'dual' receiver, then the OEM is basically useless.
OK, OK. Forget my first example. Here's another one.
Take the "A La Carte I" offering. You get 50 regular channels for only $6.99/month, but that doesn't include any of the "best of Sirius" channels, whatever that means. Maybe I'll include the top 30-40 Sirius music channels and 5-10 top Sirius talk shows in the "best of Sirius" category.
Oh, you want the Opie and Anthony Super Premium channel in addition to the 50 regular channels. That will be $6.00/month in addition to the $6.99/month that you're paying for the regular channels.
What's that? Why would you pay $12.99/month ($6.99 + $6.00 = $12.99) for 51 channels when you're currently paying $12.95/month for 170 channels? I'll tell you why. You can only get those 170 channels for $12.95 for one year. After that, all programming will be tiered to make you pay extra for any of the good channels. I learned that trick from the cable companies, and it works like a charm.
By the way, the $6.99/month for the 50 regular channels will increase to $8.99/month at the end of the second year. Also, only half of the music channels will remain commercial-free after the second year. You'll have to pay a surcharge for the commercial-free music channels after that. I'm not sure what the amount of the surcharge will be. It depends on whether any other mobile audio provider (e.g., mSpot) is providing any digital commercial-free music programming. With any luck, internet radio will have collapsed by then under the recent royalty ruling, and the rising royalty rates for all other digital music programming will prevent any other mobile audio provider from offering any digital commercial-free music programming. I will be in a position to make you pay through the nose for that commercial-free music programming at that point.
You sold your soul to the devil when you supported the merger. Now pay-up!
Hoo Hoo, Robin. I hope Mel plans to cut me in on some of this extra cash. Hoo Hoo. I need another mansion.
I have a big problem. There used to be a Chipotle and a Freebird's burrito shop next to me, but Freebird's moved to another area. I love Chipotle, but now I fear they have a monopoly on the fast-casual burrito market in my area. I don't consider Taco Bell to be a reasonable substitute, so therefore Chipotle will be free to raise prices and cut selections and customers will be forced to buy their burritos anyway. They will charge more for premium ingredients that used to be included in the price. And quality will go down as well, but people will still pay $10 for a burrito since there are no reasonable alternatives out there.
I will write to my local representative and insist they split my area Chipotle into 2 restaurants so that they will not have monopoly power over local burrito consumers.
For all the diehard fans or otherwise emotionally charged merger critics, my point is that you have to put this all in perspective. This is a service that costs as much as 3 cups of Starbucks coffee every month. They are losing money. They lose money on every radio they sell to you in hopes that you will subscribe long enough to compensate for the loss. The direct competitor (terrestrial radio) obviously does not provide the same level of service, but it is FREE. They have big impending threats with WiMax and Slacker, in addition to the legions of iPod fans out there who are more than satisfied with personal 80 GB music collections. They have to get more subscribers, and retain existing ones, if they are going to survive. Will they be able to get that many subscribers by cutting channels and raising prices?
Or should we just force them to continue with split content, bidding wars for exclusive contracts, incompatible hardware, and split OEM providers, while at the same time fighting the NAB, the RIAA, and free radio?
Hoo Hoo, JB. You're damn right the service is too cheap. That's why we're going to give them less and charge them more. Hoo, Hoo. I need another helicopter.
Hoo Hoo, JB. Don't let the XM subscribers know that the 100 channels that will be available under the "A La Carte II" Offering for $14.99/month, plus all of the so-called "Super Premium" channels that will be available for $6.00/month, can't possibly total the 170 channels that their currently getting for $12.95/month (i.e., there will be less channels for more money). Hoo Hoo. I need a ride on the Space Shuttle.
JB wrote: "For all the diehard fans or otherwise emotionally charged merger critics, my point is that you have to put this all in perspective. This is a service that costs as much as 3 cups of Starbucks coffee every month. They are losing money. They lose money on every radio they sell to you in hopes that you will subscribe long enough to compensate for the loss. The direct competitor (terrestrial radio) obviously does not provide the same level of service, but it is FREE. They have big impending threats with WiMax and Slacker, in addition to the legions of iPod fans out there who are more than satisfied with personal 80 GB music collections. They have to get more subscribers, and retain existing ones, if they are going to survive. Will they be able to get that many subscribers by cutting channels and raising prices?
Or should we just force them to continue with split content, bidding wars for exclusive contracts, incompatible hardware, and split OEM providers, while at the same time fighting the NAB, the RIAA, and free radio?"
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Good post JB, but you need to consider that XM/SIRI have put themselves in this position. More specifically, ex-CEO Joe Clayton, who practically insisted on over-paying for exclusive content which put the business model(s) in serious jeopardy. Combined with a lack of forsight in future technologies and competition.
Bottom line: XM/SIRI put themselves between a rock and hard place: Either keep what they have and operate seperately with the risk of raising prices and continued content fighting, or combine and offer cheaper packages (with less content) in hopes that they garner enough subscribers to make up for the serious loss in ARPU. It's a gamble either way.....a gamble that should have been totally unecessary had they used their heads in spending money in the earlier years.
Stop with the Slacker, internet radio and iPod's being competition. They are not. I listen to internet radio and the selection is not comparable, gave away my iPod after getting XM and have zero interest in Slacker. Sat Radio is a much different offering and experience than any of the supposed competitors. I don't consider any of them to be a satisfactory replacement. And for anyone that thinks the prices won't continue to climb, cable has proven this will happen. I used to pay about $25/month for cable 15 years ago. Now I have some wonderful tiered programming available to me and my bill is about $155/month. Great fucking deal. Right off the bat I'll be paying more for sat radio. I love it but yes, there is a price where I opt out and $15 is probably it.
Chaulk another one up for Joe Business - my Main Man. We're gonna have 'em right by the short hairs if the merger goes through, JB. The value of our shares will shoot to the sky like my Infinity stock did. Then we can both sell 'em high just before the WiMAX-enabled people shut the company down for good.
Of course the NAB is trying to bullshit everbody into thinking that the merger is a bad thing meanwhile they don't give two shits about the general public...just their profits.
I think the only thing holding the merger back is the shitty 0.0 show...no one wants to pay for a lame copy of the Stern show that no one listens to...that why they had to go to FREE FM because nobody gives a shit about them on xm..especially XM themselves
PFreak: I agree with you on the pricing. Sure, the deals look good now, but people have to realize that paying less=getting less! Nobody seems to care however.
If you want to get what you get today (meaning ALL XM or ALL Sirius), you WILL be paying more. Period.
In short term, ala carte' is the way to go. But long term? Don't know how long they'll survive without having to raise prices again.
Hoo Hoo, Mel. Figures don't lie, but liars do figure. I invented that saying, Mel.
No wait, you did.
Yeah Jack, you figured it out. Go back to 3rd grade you uninformed douche.