In an incredibly descriptive article entitled Dinosaurs vs. Satellites, senior editor Radley Balko paints a clear picture of the NAB's efforts to undermine the satellite radio industry.
From their consistent flip-flops in defining competition, to anti-satellite radio advertising (which, miraculously, has disappears from their website) to vehement protection of "localism" - we see the true colors of the NAB through this article.
One interesting thing I didn't know: "... the NAB lets members of Congress and their families record public service announcements in NAB studios free of charge. The commercials are then broadcast in the members districts on NAB stations, also free of charge. That's broadcast time politicians often have to pay thousands of dollars to reserve."
Wow.
scum of the earth...but what can really be done by all this.
It is amazing to see NAB painted as such bad guys in this -- NAB is simply doing what it is supposed to do, which is to represent the interests of its membership.
Why are these anti-NAB types not pointing out some of the duplicity that has been put forth by SIRI & XM? Like the absurd argument that consumers will benefit from creation of a monopoly? Or contrasting previous statements from management about how "competition is healthy" versus today's, "Oh, we will be good to the consumer after we're a monopoly"? Early on, Mel told us the future of satellite radio was not at stake, but now we hear that a merger "protects the future of satellite radio".
Everyone has their own position to play in this game. Hopefully, consumers are not gullible enough to think that a merger of XM and SIRI is a good thing for THEM, particularly, given the rather obvious fact that underlying cost savings are minimal, at least for the coming 5-10 years.
So, SIRI has lost 2 billion since hiring Stern for 3/4 billion dollars. Cost savings via the merger will be nominal, yet, somehow, they're going to find it in their hearts to make satellite radio better and cheaper for the masses?
Nice post, slow clap to that. Both sides are full of shit. And honestly either sat radio competes against all entertainment (AM/FM, TV, video games, internet, internet radio, really anything that is entertainment) or it is it's own thing. Sat radio doesn't have to play by the rules of FM radio which gives them an advantage the FM content providers will never have. Imus was fired for saying "nappy haired ho's". On satradio he could have said "pubic-haired nigger bitch ho's" and been fine. If there are two sets of rules then perhaps the competition thing is a little bit bullshit.
Does anyone really think these companies want to merge because it's in the best interest of their customers?
Just remember our government is so contradictory to everything that they might not let these 2 companies merger but will sue microsoft and let comcast continue on their way of f-ing everyone and repeatedly false advertise about ALL of their products.
"Does anyone really think these companies want to merge because it's in the best interest of their customers?"
Actually, that's pretty simple. Because our best interest is their best chance to succeed. With subscription based companies, alienating the customer is exactly the opposite of what they're in business for.
This article is written well enough to be placed in history textbooks. I can't wait for the merger to be approved so that my satellite radio bill will be reduced by 25% to 50%.
Stack - why are you worried? You support free radio and believe it is better. If you are correct, then there sat radio is not a threat.
Now, go back to your little terrestrial radio station, figure out some clever gimmick to fill the time between commercials about vaginal itch and weight gain, and I'll go back to Arlo Guthrie's "Motorcycle" -- something you would never, ever hear on your superior product.
It's tough going extinct, isn't it? Too bad we can't make fossil fuels out of the local radio stations.....
This article is written well enough to be placed in history textbooks. I can't wait for the merger to be approved so that my satellite radio bill will be reduced by 25% to 50%.
Posted by: Rich | April 20, 2007 04:15 PM
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Agreed Rich. After the merger is approved, I will have the chance to pay less, to pay for only the channels I want to listen to, instead of having to pay $12.95 a month for all the channels, most of which I never listen to!
What a waste of a subscriber's money. In the future, less will be more! :D
Cartoon Caption ...
"The picture's pretty bleak, gentlemen ... the world's climates are changing, the mammals are taking over,
and we all have a brain about the size of a walnut."
The NAB
i want them to merge because i bought sirius at $5.15. nice diluted stock i bought, now the real price is showing. i don't know what the hell nab cares if they merge. i thought this was a dead market. why are they afraid?
>>> I can't wait for the merger to be approved so that my satellite radio bill will be reduced by 25% to 50%.
This remark is idiotic.
If either company WANTED to offer a subset of channels at a reduced price today, they could do so.
There is no benefit to consumers in creating this monopoly. Anyone who believes they will receive a lowered price by creating a monopoly is just ignorant of the way businesses operate.
stackpointer.
we will benefit from the merger because the tech and idea of sat radio is to new and fresh to stop maturing at this point. This maturity stage would be a lot quicker, cheaper, and better if they got together. And they still are competing. They are competing against everyone really. They realized that competing with one another was just hurting them and the final vision of being a huge industry.
Its about getting things done really. Now with both companys you have the possibilty of allocating all resources. this means...video, gps, weather, top personalities (more choices).
its just bad business to do what everyone thinks...raise prices prematurely and stop innovation. Yea every business does it...but they are not like any business or industry we have seen ever.
>>> After the merger is approved, I will have the chance to pay less, to pay for only the channels I want to listen to, instead of having to pay $12.95 a month for all the channels, most of which I never listen to!
Nonsense. I cannot imagine a rational person coming to this conclusion.
The simple, indisputable truth is that these two companies lost a total of 1.7 billion dollars last year (a substantial portion of which was because of the stupidity of SIRI having hired Stern).
Any way you look at it, they have got to raise more revenue between them, as it is clear that there is no significant cost savings over the near-to-intermediate term.
If they offer 20 channels for $5.95, the losses get worse (due to the cost of getting receivers, now required to be dual-capable, to the market).
They are not going to raise more revenue by cutting yours and Rich's fees. And they are not going to save significant money if you choose only 20 channels instead of taking them all (Stern still charges $150M/year, Oprah still charges $21M/year, Nascar still charges $20M/year, etc. -- PLUS, the potential for ad revenue off of these channels is dramtically decreased).
When SIRI signed with the NFL for $300M, it was a Hail Mary that failed. When SIRI signed Stern for $750M, it was a second Hail Mary that failed. Now, they're going for all that is left -- to try to get XM to bail them out of the mess they're in. Inexplicably, XM agreed to do it, and if the merger passes muster, SIRI will drag both companies down with it.
starting to have doubts about the merger...bottom line, the FCC does what it wants... end of story. no one will have the power to change that really.
>>> I can't wait for the merger to be approved so that my satellite radio bill will be reduced by 25% to 50%.
This remark is idiotic. Says StackPointer.
Let’s see how idiotic this remark is. I currently pay $12.95 per month for SIRIUS and $12.95 per month for XM. Hmmm….I think that equals $25.90 per month I am currently paying for satellite radio. Not let us see what happens after the merger.
Post merger cost (worst case per Mel Karmazin and Gary Parsons):
$25.90 per month for all of satellite radio minus the post merger discount of $2 equals $23.90
Post merger cost (best case per Mel Karmazin and Gary Parsons):
$25.90 per month for all of satellite radio minus the post merger discount $10.00 equals $15.90
Jeez….. in the best case scenario per Karmazin and Parsons I would get the best radio on radio AND all of XM for $2.95 more per month than one currently pays for SIRIUS.
I am not very good with math stackpointer, what would the savings be in the best-case scenario reported on a percentage basis?
We all heard on CSPAN and can read in the Congressional record that Mel said the post merger discount would be closer to $10 than $2. This is where my original statement was derived.
Now who is an idiot?
Rich,
I hate to break it to you but the vast majority of consumers are not going to subscribe to XM and Sirius. Most will choose one and be happy with it.
Maybe, MAYBE, 1/10 of 1% will become dual subscribers - and I doubt it is that high. Only a total nitwit would use such an outlier scenario as the basis for any kind of analysis. The average consumer is going to be ripped from one end to the other by this deal.
HOW MANY TIMES DOES IT HAVE TO BE SAID? THERE ARE NO SIGNIFICANT NET COST SAVINGS RESULTING FROM THIS MERGER. I've been saying that since the first time the word was mentioned, and nobody yet has been able to show otherwise.
You couldn't analyze your way out of a paper bag. But if you would like to back up the idea that there will be (and cost savings are certainly necessary if either company is to be able to save the consumers money, SINCE both (particularly, Sirius) are losing money hand over fist, please go for it.
>>>Maybe, MAYBE, 1/10 of 1% will become dual subscribers
So you are saying that out of the current 6 million plus SIRIUS subscribers only 1/10 of 1% would shell out $2.95 per month for all of XM's content? I see your point.
This is getting a little ridiculous Stack - are you employed by the NAB? Here's some math for you:
Stern is undeniably getting paid a lot of money - $620 million over 5 years. I'm sorry if this gets in the way of your ranting, but let's do some math: Stern has pulled in 1.3 million subscribers (so far) based on independent estimates from Bridge Ratings, at an ARPU of close to $13 per month. 1.3 million * $13 * 12 months = $202 million revenue per year directly attributable to Stern, vs a ~$125 million salary. Correct me if I'm wrong, but I'd say 202 is a significantly higher number than 125, which means that Sirius is making money on the Stern deal. And that's before you figure in the brand recognition he has brought to Sirius. Again, I'm sorry if this math interferes with your "well-researched arguments".
Really, the biggest reason to support the merger will be the interoperable hardware. OEM subscribers will have a CHOICE as to what channels they want, instead of being forced with whichever service the dealer chooses. Content providers (i.e. MLB, etc.) will not be able to exploit satrad competition for exclusive deals like they have thus far, and subscribers will actually be able to get baseball AND football AND basketball on one subscription, if they so CHOOSE.
The cost savings really are a secondary factor - in the worst case, the price remains the same for the same amount of service. Judging by the rising churn rate, satrad really can't afford to raise prices.
I am waiting for the companies to merge before I buy a receiver - I want all the sports, and I like Sirius's entertainment programming and XM's music programming. If they merge, I won't have to sacrifice something I like on XM for Sirius and vice versa. And if they get stupid and try to act like they have monopoly power, I will simply cancel my subscription and go right back to free radio + 30 gig iPod. Satellite radio is a luxury preference to some, and a necessity to none.
If satrad companies want to reach the masses, they need to end the destructive competition between each other and make a combined product with more value to potential subscribers.
>>> Correct me if I'm wrong, but I'd say 202 is a significantly higher number than 125, which means that Sirius is making money on the Stern deal.
Okay, I'll correct you.
Prior to Stern's hiring, Merrill Lynch and others were projecting losses for Sirius of about a billion dollars for '05 and '06. After hiring Stern, they lost $863M in '05 and $1.1 Billion in '06. Maybe YOU call this "making money", but it obviously isn't. That's a billion dollars in loss that wasn't supposed to occur, and turned up only after hiring Stern.
The fact of the matter is there are costs associated with Stern BESIDES his $690 Million (and growing) payday. Every last one of those "Stern subscribers" cost Sirius $200-250 just to get signed on. And in addition to paying for Stern's ridiculous salary, you have to pay 1/3 of what you collect for other variable costs. If you're going to attribute subscribers to Stern, you have to attribute the related costs, as well.
As of today, the loss on Stern has been horrendous. Now, maybe they'll recover some of those costs in future years -- but if they give him another $50M-$80M in stock this year, it will be an uphill battle.
There are a lot of people claiming Stern is a glowing success, but the numbers absolutely do not bear that out at this point.
Whether they made money on Stern will not be known until his contract is up and the last stock is forked over to him -- which may well bring his total compensation to a level beyond 3/4 billion dollars.
If retail has fallen off the way so many have claimed, Stern will have been responsible for generating huge losses in the early years with no ability to bring in subscribers in the later years. As 2.5% churn eats away at the early subscriber gains, the Stern fiasco will become clear to even those who don't understand the arithmetic today.
Stern was a Hail Mary -- do or die. And since hiring him, and the publicity surrounding him started, the losses have been massive. Even Mel's artificial goal of "Cash Flow Breakeven" has now been withdrawn ("we were cash flow positive in Q4'06, but we will no longer provide cash flow guidance" -- big surprise -- those of us who were paying attention recognized that CFBE in Q4'06 was an artificially created, unsustainable event).
>>> Really, the biggest reason to support the merger will be the interoperable hardware. OEM subscribers will have a CHOICE as to what channels they want, instead of being forced with whichever service the dealer chooses.
Fine. Why do we need a merger for interoperable hardware? A condition of the license grants required development of an interoperable receiver, and the prototype has been on the shelf for over a year. Parsons, a year ago, even indicated a willingness to work with Sirius to offer a "joint" subscription at a discount. But he has also implied there was insufficient interest in a dual capable receiver to make it financially feasible for anyone to build it. Most people simply DO NOT CARE.
>>> The cost savings really are a secondary factor
If there are no cost savings, there is no benefit to merging. That is the ENTIRE BASIS for the merger. If they can't save money by merging, how can two companies which combined for almost $2 Billion in losses last year even THINK about discounting prices? They can't.
>>> I want all the sports, and I like Sirius's entertainment programming and XM's music programming. If they merge, I won't have to sacrifice something I like on XM for Sirius and vice versa.
You're being naive. NFL's deal is with SIRI; MLB's is with XM. These deals will have to be renegotiated and those who receive this programming are going to have to pay for it.
If you think the merged company is going to offer you both NFL and MLB at a discounted price, you have another think coming. Not going to happen.
In the end, we will see half the music programming simply disappear. The best channels from both services will be kept. Do you think they'll keep both The Vault and Deeptracks? Both blues channels? Both sets of classical channels? Of course, not.
If they offered an interoperable receiver with a discount for both services, you would have far more choice than you will post-merger. Of course, the problem is, there is insufficent demand for both services to warrant building the receivers.
>>> they need to end the destructive competition between each other
Which destructive competition is that? There has never been an advertisement run by either company attacking the other. The OEMs are, for the most part, aligned with one or the other. What, exactly, are you referring to with this remark?
>>> I will simply cancel my subscription and go right back to free radio + 30 gig iPod. Satellite radio is a luxury preference to some, and a necessity to none.
That's you. I have an 80GB Ipod, full of my old CDs, I carry around, too -- almost never listen to it, preferring XM instead. I cannot get C-SPAN on my IPod or terrestrial. I cannot get realtime news like FNC & CNN on my Ipod or terrestrial. I cannot get every NFL/MLB game on my Ipod or terrestrial, and I cannot get Stern, O&A, Oprah, or Martha, anywhere but satellite radio. I cannot find a decent blues, classical, bluegrass, or 40s-era channel on terrestrial, and sometimes, you just want radio without having to have loaded up your IPod. And my Ipod, doesn't allow me to easily sample new music to decide whether it is something I want to download later.
Ipods have their place; but they are not radio and cannot and do not compete directly with radio. Until IPods deliver realtime content, they are recording devices in the same category as CDs. They are not radios.
>> at an ARPU of close to $13 per month.
By the way, ARPU is closer to $11/month.
Wow. Now you've resorted to make-believe numbers and distorted logic to support your rant. That's cute.
I think the blatant disregard for logic and research is pretty obvious to most people reading your post, so I'm not going waste my time listing every incorrect statement you made.
Do you really think that subscribers will be helpless if satrad tries to act like a monopoly?
"I don't like the service anymore, but I have to keep sending them a check every month because I don't have any other choice."
>>> Wow. Now you've resorted to make-believe numbers and distorted logic to support your rant.
>>> so I'm not going waste my time listing every incorrect statement you made.
Uh-huh.
Translation: "I was wrong but don't think I want to admit it, so I think I'll let it drop".
Either you want to deal in facts or you don't. I stated facts, and now you, suddenly, don't want to discuss it anymore.
Can't blame you.
Stack: "Every last one of those "Stern subscribers" cost Sirius $200-250 just to get signed on."
From 1Q 2006 (the Stern bubble) report: "Subscriber acquisition costs (SAC) per gross addition were $113."
The ARPU for ALL subscribers, including the OEM free trial subscriber, is $11. The ARPU from retail subscribers is higher, and the ARPU from Stern subscribers is even higher than that because of the higher ad rates on his broadcasts. I put a conservative estimate of $13 ARPU for Stern-motivated retail subscribers, and I bet the actual number is higher than that.
"Maybe 1/10 of 1% will become dual subscribers."
I'm sure you put a lot of research into that statement.
"You have to pay 1/3 of what you get for variable costs."
From the 10K: the variable cost per subscriber per month is $2.
"If you think the merged company is going to offer you both NFL and MLB at a discounted price, you have another think coming. Not going to happen."
Has anyone ever stated that you would get both for a discounted price? People just want the CHOICE to get either or both on the same radio. And in any case, it will cost LESS than the $25.90 + 2 radios that you would have to pay now.
"Which destructive competition is that? The OEMs are, for the most part, aligned with one or the other."
You answered your own question. The fact that the OEM's have divided the companies leaves the customer without a choice, which I call destructive competition. Also, the content providers have caused bidding wars for exclusive broadcast rights, which has effectively given subscribers less choice and higher prices. You absolutely cannot argue that exclusive contracts and bidding wars are good for the consumer. When the companies merge, content providers lose their leverage and customers get to choose which content they want.
"Ipods are not radios".
Thanks for clarifying that concept. But I have a quick question: do you ever listen to your iPod and satellite radio at the same time?
"If there are no cost savings, there is no benefit to merging. That is the ENTIRE BASIS for the merger."
Wow. I could have sworn having access to all channels on one radio was a reason for the merger, but I guess I was wrong. Immediate cost saving are minimal, long-term cost savings are much bigger.
You list the benefits of satellite radio over others - do you think these benefits are going away after a merger? Do you think they're going to throw them away and scare off all the subscribers? The main distinguishing factor for satellite radio is that they CHARGE PEOPLE for the benefits. If they degrade the value of the service, they will lose subscribers, period.
I could go on, but this is getting old. The amount of ignorance displayed by the anti-merger camp is almost unbearable, and they all seem to believe that subscribers aren't smart enough to cancel the service if the quality goes down.
>>> "Subscriber acquisition costs (SAC) per gross addition were $113."
Right. And you are obviously confused as to the meaning of SAC. You do realize that the measure of the cost to add subscribers is not SAC, but is CPGA, which SIRI doesn't report, but basically is SAC plus marketing costs, which puts the CPGA at well in excess of $230/subscriber. Sirius sleight of hand -- don't report CPGA and people will just assume that SAC and CPGA are the same thing.
>>> The ARPU from retail subscribers is higher, and the ARPU from Stern subscribers is even higher than that because of the higher ad rates on his broadcasts. I put a conservative estimate of $13 ARPU for Stern-motivated retail subscribers, and I bet the actual number is higher than that.
What ARE you talking about? ARPU is, by definition, the Average. It is what it is. We know that Stern ad revenue has fallen well below anyone's expectations, and that subscribers are generally getting discounted for longer-term subscriptions. Your point is taken, but AFAIK, Sirius is not segregating ARPU by content items, so you are making the widest of guesses -- there is no evidence to suggest that what you are saying has any truth to it at all.
Just as an example, if Stern followers are so committed, how do you know the boost caused by his ad revenue isn't more than offset by longer-term subscription discounts? The answer, of course, is that you don't. At any rate, ARPU is an average and unless you have some additional descriptive statistics, that's as far as you can go with it.
>>> From the 10K: the variable cost per subscriber per month is $2.
Please cite the location of this remark in the 10K; I don't see it. At any rate, true variable costs per subscriber per month are well beyond $2, and are closer to $3.50 or about 1/3 of revenue. If you believe that variable costs amount to only 18% of ARPU, you clearly aren't getting the entire picture. I recommend you run some simple regressions of the expenses against revenue and you'll quickly conclude that 18% of ARPU is a significant understatement.
>>> The fact that the OEM's have divided the companies leaves the customer without a choice, which I call destructive competition.
Oh, you mean because one company was better at something than the other, that's "destructive"? Because XM was better at locking up OEM deals, that is somehow damaging the industry? How absurd!
The customer has a choice. They can stick a Sirius Starmate on the dash. That's more choice than they're going to have after the two companies merge and half the music channels are eliminated, that's for sure.
You're funny.
>>> Also, the content providers have caused bidding wars for exclusive broadcast rights, which has effectively given subscribers less choice and higher prices.
No, the content providers didn't do this. Sirius did. It was Sirius who paid $300M for NFL when it had less than 200,00 subscribers (an absolutely idiotic move). It was Sirius who paid Howard Stern at least 6-8 times what XM was willing to pay him. It was Sirius who paid NASCAR 5x what XM was paying.
And now, it is Sirius who has somehow convinced XM to bail them out of their financial train wreck.
>>> You absolutely cannot argue that exclusive contracts and bidding wars are good for the consumer.
As I stated, there have been no bidding wars. Yes, XM paid more than it should have for MLB, and they had to do it. But that's an isolated event. It is Sirius who has consistently overpaid for content, while XM has consistently (with the exception of MLB) been judicious in its spending on content.
>>> When the companies merge, content providers lose their leverage and customers get to choose which content they want.
So, which is it -- is there other competition or is there not? Will you be able to stream MLB and NFL to your cell phone or won't you? Is there other competition or isn't there? Is MLB available via other sources or isn't it? You are contradicting yourself from one paragraph to the next.
This is a bizarre view of "choice". Choice comes from competition. Not from monopoly. Only a sucker would believe that merging these companies is going to give him "more choice". What it will bring is higher prices, as unregulated monopolies always do and always will.
>>> Thanks for clarifying that concept. But I have a quick question: do you ever listen to your iPod and satellite radio at the same time?
Never. So what does that have to do with anything?
The fact remains that as of right now, Ipods cannot deliver 170 channels of radio. They are two totally different things, unrelated in every substantive context. The argument you're making is akin to saying that McDonalds competes with Ruths Chris because they both sell food. Radio is not the same as a CD. Radio is not the same as an 8-track or cassette. And it is not the same as an Ipod. Never will be.
>>> I could have sworn having access to all channels on one radio was a reason for the merger, but I guess I was wrong.
I pointed out to you that a much more effective way of getting all channels on one radio is for the companies to simply decide to fund the manufacture & sale of the receivers. They could do this without the massive cost of merging the two organizations.
>>> Immediate cost saving are minimal, long-term cost savings are much bigger.
There has been no evidence put forth that substantial cost savings will occur, even in the long term. By cutting services, one would expect it, but the reality is that the merging of the technologies is a difficult and expensive task that will take years to resolve. In the meantime the consumers suffer.
>>> If they degrade the value of the service, they will lose subscribers, period.
One of the premises for the existence of the FCC is to be a watchdog for the public. The argument that a monopoly is more consumer friendly than a duopoly is ridiculous on its face.
But a provider in a sector with one provider inarguably has more pricing power than a sector with two providers. I don't quite see how a rational person can argue differently.
>>> I could go on, but this is getting old. The amount of ignorance displayed by the anti-merger camp is almost unbearable
I agree it gets old, but there is plenty of ignorance to go around.
Most obviously, it is ignorant to assume that creation of a monopoly is better for consumers than leaving the existing duopoly in place. This is a bill of goods sold the public by Mel, and frankly, he's doing a damned good job of it.
Even assuming a broad definition of competition which encompasses Ipods & other devices, how anyone can argue that consumers are better served by one company than by two is just beyond rational thinking. It is intuitively obvious that two companies competing are better than one company in a monopoly. Duh.
Given by the number of times you've used the word "monopoly" to describe a luxury subscription service that competes with a free service (among others), I think the NAB has a position available for you.
Are you in favor of having a "choice" between HD-DVD and Blu-Ray? Would that be a monopoly if the two formats merged? Their competition has resulted in split content providers, more expensive hardware, and slower consumer adoption. Sound familiar? Would consumers be forced under monopoly conditions if they gave up the competion between the two formats? After all, aren't they the only competitors in the "High-definition video hardware" market?
>>> Given by the number of times you've used the word "monopoly" to describe a luxury subscription service that competes with a free service (among others),
Oh? So, I can get 170 channels of commercial free music, CNN, FNC, C-SPAN, MLB, O&A, Oprah, all that -- for FREE? I didn't know that.
This is an idiotic argument. Sure, there are multiple definitions of "competition" -- some people think it should be broadly defined, others think it should be narrowly defined. And I don't know who is right.
What I do know is that since 2001 I have been a subscriber to satellite radio, continuously, and if they were charging $20/month I would still be a subscriber, because I cannot find what it has to offer, anywhere else, period, end of story. Perhaps you think you can, but you cannot. And you can't get it on your Ipod. And you can't get it via Wimax (what a laugh THAT is).
The fact is there is no direct competition from which I can get the same product, or one that approaches being similar. Since the existence of an adequate substitute for satellite radio, or lack of it, determines whether a monopoly can exist, perhaps you want to argue about that. Just as McDonalds is not a substitute for Ruths Chris, neither is terrestrial radio a substitute for satellite radio. If you don't believe me, you can find thousands of posts easily where people are extolling the virtues of satellite radio and feel just as I do -- that there is no way in hell they're going back to terrestrial.
All the amateur commentary here and other places put aside, I refer you to the following rather authoritative analysis of the subject, which set out the reasoning in detail:
http://www.c3sr.org/news/industry/Sidak_declaration.pdf
And here, from the same site, are the remarks of a former FTC chairman:
http://www.c3sr.org/news/industry/Letter%20from%20Former%20FTC%20Commissioner%20Miller.pdf
These are not amateurs, and their remarks are clearly supported by the LAW, untainted by the by the remarks of Mr. Karmazin.
It would do you some good to look over these papers. The relevant portion of Mr. Miller's letter is as follows:
The new defense that has emerged is Mr. Karmazin's assertion that XM and Sirius are part of a much larger market -- it isn't just satellite radio, it's broadcast radio, i-Pods, CDs, and so forth -- and the merger is not two-down-to-one, but a merger of small players in a larger market. This is an empirical question, of course. No doubt there is some substitutability among these products. But to meet the test of not harming consumers, there has to be such substitutability that the merged firm could not raise its prices and earn monopoly returns for a sustained period. It is common sense to many consumers the alternatives are not an adequate substitute, and as described above, entry into this market would be very, very difficult.
The man has made his case, and it is pretty difficult to argue it. No merger.
JB,
Your HD-DVD vs Blueray doesn't hold up because there is not just one company manufacturing players. There is and will continue to be competition in this area. No matter which format wins, prices of players will continue to fall because of the competition between manufacturers. If only Sony made Blueray and had monopoly power over the pricing, features, etc then your argument would hold some merit.
And you use the point that it's a subscription service to defend the monopoly. What does the fact that it's a pay service have to do with anything? So is cable, internet, phone, TiVo, etc. They aren't allowed any magical monopoly powers.
Different manufacturers produce satellite radios, right? Are not Samsung, Audiovoxx, Pioneer, JVC, Directed Electronics competing there? Will that go away with a merger? And isn't there a clear motive to reduce the price of the hardware, even for a merged company? If they are going to appreciably reduce the price of hardware, there needs to be a common format, and that will not happen without a merger.
Customers shouldn't be forced to sacrifice programming on one service for the other. If there were a way to end exclusive contracts, technology, and OEM deals without a merger, I would be in favor of that. However, I don't think that could ever happen without a merger.
Recently, there was a consumer outrage when MLB negotiated an exclusive deal with DirecTV, and they eventually scrapped the plan as a result. Effectively, this "competition" would have given customers less choice. This is exactly what has happened thus far in the history of satellite radio - by dividing up content providers, technology, and OEM partners, the competition has given customers LESS choice. If they merge, the customer gets access to ALL content, on ANY radio, from ANY car manufacturer. The alternatives to satellite radio aren't perfect, but they are GOOD ENOUGH to prevent the satrad company from having the power to screw subscribers. By no stretch of the imagination is satellite radio a must-have product - it has benefits, but the vast majority of subscribers would not tolerate a reduction in the value of the service.
You're making my point. There is healthy competition amongst hardware producers. There are many content providers for HD-DVD players (every movie studio on the planet) but with this merger there will be only one content provider for Sat Radio. One provider means less choice. I've never ever seen a monopoly help the consumer. It's been a while and us, the customers, still have no info on pricing. Oh sure, we've heard #'s thrown out but where is some hard info? There is none because they don't have any clue yet. Every study that looks at a la carte pricing in the cable industry concludes that you will pay more. The only alternative to paying more is to lose niche channels. Once people have to pay more for things like sports packages they chose not to.
And I couldn't strongly disagree with you more when you say there are "good enough" alternatives. Where can I get what sat radio offers in one package? iPod's are fucking crap. Mine went in the trash. It's a digital walkman, that's it. Internet radio can't do what sat radio does, neither can FM. In fact, I can't think of one single uncencored broadcast other than sat radio.
Great posts Stackpointer and JB. Stack, I agree with much of what you said, especially the amount of losses Sirius has sustained since acquiring content (including, but not limited to, Stern).
Mel NEEDS the merger more than anyone.
On another note. I believe it was Homer985 that pointed out that XM and Sirius cannot simply share (sports) content once the merger is approved. The NFL/MLB, etc, all signed contracts with ONE provider. If they merge, those contracts have to be renegotiated in order for them to appear on the other service. This cannot be cheap either!
Add to this that many music channels will get the axe, affecting us dual-subscribers! I don't care about slightly lower prices, I want CHOICE for which rock, blues, and classical channels to listen to, because they are VERY different from each service!