Report: Former FCC Commissioner concludes XM-SIRIUS Merger will benefit consumers
Harold W. Furchtgott-Roth, a prominent economist and the former Commissioner of the FCC, released a study today exploring the economic considerations that government agencies should take into account when reviewing the proposed XM-Sirius merger.
The paper, "An Economic Review of the Proposed Merger of XM and Sirius," was prepared for XM and Sirius and was filed yesterday to the FCC as part of the companies' merger application.
Furchtgott-Roth, founded Furchtgott-Roth Economic Enterprises in 2003 and frequently consults on issues related to the communications sector of the economy. From 1997 through 2001, Furchtgott-Roth served as a commissioner of the FCC and he is one of the few economists to have served as a federal regulatory commissioner and the only one to have served on the Commission.
"After studying various economic factors and potential changes in competing communications services, I conclude that American consumers have a wide and rapidly expanding range of choices for communications services that compete with XM and Sirius," said Furchtgott-Roth. "Additionally, these competitive choices discipline the prices that XM and Sirius charge subscribers today and will continue to do so regardless of whether the firms merge.
"I believe that government agencies should afford these companies the flexibility to respond to rapidly changing market conditions."
[Read the full Furchtgott-Roth Report (PDF)]
...or check out the key findings from the report after the jump.
XM and Sirius compete with other providers of communications services, both in a fixed and a mobile environment
- Nearly all of the programming available via satellite radio can be obtained elsewhere. In fact, a single internet device can offer many communications services including those offered by XM and Sirius. Although mobile broadband services are not likely to displace all other mobile communications services, such services will certainly siphon some consumers away from existing mobile services and will discipline the prices that the other services command in the market;
- Satellite radio has a relatively small presence in comparison to other comparable communications services. To take just one example, the 14.5 million satellite radio subscribers pales in comparison to the 237 million phones in use today, and many phones allow users to access wireless data services and download music;
- Mobile internet services are also becoming increasingly available in cars. If a combined satellite radio provider were to raise prices, consumers would find identical or similar programming elsewhere and switch services; and
- The FCC has taken note of this trend toward a broader mobile services market in other proceedings, and it should maintain that position when evaluating this merger. Particularly in light of the rapid changes in technology and market structure, it would be unreasonable for government agencies to restrict the merger analysis to a static environment that fails to account for these dynamic market conditions.
The market structure for both mobile communications services and fixed communications services is changing rapidly facilitated by substantial government involvement
- The federal government has taken substantial steps to facilitate the deployment of advanced communications services;
- The FCC has recognized shifting market conditions in reviewing license transfer applications in the context of merger reviews; and
- The merger is consistent with the government's efforts to facilitate deployment of advanced communications services and would also promote the government's efforts to complete required regulation of satellite digital audio radio service (SDARS) licensees, specifically the coordination of the 2.3 Ghz spectrum with WCS licensees.
It would be unreasonable to examine the proposed merger of SIRIUS and XM in a static environment that does not account for changing technology and market structure
- Given the complexity of technology and the time required to develop and launch services, satellite service companies have an unusually long planning horizon;
- Rapid changes in the technical capabilities of communications services mean that market definitions today may have little relevance in just a few months or years; and
- Failure to provide satellite operators with flexibility in adjusting plans can lead to unforeseeable harmful consequences.


Comments
Wow. It seems the only people against this merger are some XM subs (Some are legit, some are merely the dozens of Greg and Tony fans who are afraid because they were told to be), The NAB and some of the corrupt scumbag Congressmen they own.
At least thats the way it seems.
Posted by: MikeHunt ? | June 28, 2007 11:05 AM
Yeah, that about sums it up.
Posted by: MeatFarley ? | June 28, 2007 11:19 AM
And why shouldn't XM fans, and O&A fans as well, be against the merger?
As an XM subscriber, I really can't see how the merger would benefit me. Sirius's music channels are basically FM without the commercials; XM has better playlists and better on-air staff. Sirius has the NFL and Howard, sure...And those who want Howard have likely already subscribed to Sirius...So, other than the NFL, and maybe NASCAR, what does Sirius's programming have to offer an XM subscriber? Not much.
I can see the benefit of the merger to the Sirius subscriber...If it goes through, you'll have baseball, hockey, the PGA, college sports, better music (if the XM music channels are kept)...So yeah, to one side, it's pretty beneficial.
And as far as O&A fans go, the show went through enough years of dealing with Howard and Mel. So, they'll either be let go, or wind up having to deal with the same restrictions and gag orders that they dealt with during their WNEW show.
So yes, I think XM and O&A supporters are opposed to the merger with good reason...It doesn't benefit us in any way.
Posted by: Wes Derby ? | June 28, 2007 11:29 AM
This may be another pro-merger report, but if it's from the former FCC Commissioner, then it may have a little bigger impact.
Posted by: realwx ? | June 28, 2007 11:40 AM
XM has better playlists? Are you fucking daft? How is the same version of the same song better because it's on XM? They get their music from the same fucking place. How does XM's Top 40 channel differ from Sirius'? IT'S THE SAME MUSIC! Fergie on XM is the same as Fergie on Sirius. Sinatra on XM is the same etc etc etc etc.
Better on-air staff? How can you tell? The few channels I listen to that have "personalities" only talk for about 30 seconds every 2 hours. If you want "personality" chatter, go listen to Rick Dees.
I want NASCAR back.
I want Stern, so I don't have to listen to the CBS segment of OnA as they try to describe a fart without actually saying FART. JUST FUCKING SAY FART! Or when they start in with the "then what happened?" bit that only they think is funny, and drags on for 20 minutes more than it should.
Then what happened?
And then what happened?
What happened after that?
Then what happened?
Then what happened?
Then what happened?
Then what happened?
Then what happened?
Oh god, I'm larfing so hard. TEE HEE! TEE HEE!
Posted by: MeatFarley ? | June 28, 2007 11:45 AM
Wes said, "As an XM subscriber, I really can't see how the merger would benefit me. "
Uh...maybe by keeping the satellite radio industry afloat!!?
I too subscribe to XM. There is too much overlap, lets merge and make Satellite radio more attractive to the average person who is only going to want to subscribe to 1 outfit anyway. This way, I can get Football and Stern...and maybe that cool BBC music channel to go along with my favorites at XM.
--Brian
Posted by: Brian Smith | June 28, 2007 11:52 AM
Meatfarley - the point being made is that other than the top 40 channels, which are geared toward top songs and repetition, the XM music channels have deeper playlists -- this means they play MORE songs and have less repetition. Get it?
Posted by: iband | June 28, 2007 12:04 PM
MeatFarley = Stern troll.
Crawl back under your Member's only rock, you troll.
HOO HOO, I invented being an outdated, lazy has-been
I work 4 days a week, TELL EM FRED!!!!
Posted by: Frrunkis | June 28, 2007 12:05 PM
Wes -
Because you personally don't like the channels on the other service, they shouldn't be allowed to merge? I've heard this opinion now a few times from both Sirius and XM fans, but you do not speak for everyone. Some people (myself included) would like to have access to all of the channels without having to buy 2 radios and 2 subscriptions. If you don't want those Sirius channels, then don't pay for them. You can keep listening to your XM channels for the same price you're paying now after the merger. The merger will just give subscribers access to the alternate service's channels if they so CHOOSE.
If you don't like the other service, that's okay - but you shouldn't force your opinion on people who do like both services.
Posted by: JB ? | June 28, 2007 12:17 PM
Interesting analysis from an important source. However, was this issued as an independant opinion or this is a paid XM/Sirius shill?
Posted by: Brewster | June 28, 2007 12:37 PM
MeatFarley = Stern troll.
That's terrible. I'm sorry.
My 2 XM subs say otherwise. But since I'm not bald, single, and unemployed, they won't let me in the cool pest club.
Posted by: MeatFarley ? | June 28, 2007 12:37 PM
so, other than the NFL, and maybe NASCAR, what does Sirius's programming have to offer an XM subscriber? Not much.
So baseball, hockey, the PGA, college sports, and better(read as: the same) music make the deal SO much greater for Sirius fans but, the NBA, NCAA basketball, pretty much all the other college divisions that XM doesn't have(big east,big10, SEC, notre dame, etc etc), Premier League Soccer, ESPN, and all of the exclusive musical channels Sirius subscribers have mean absolutely nothing?
And as far as O&A fans go, the show went through enough years of dealing with Howard and Mel. So, they'll either be let go, or wind up having to deal with the same restrictions and gag orders that they dealt with during their WNEW show.
Honestly, what exactly did the show "go through"? Did you listen to the show before they got to XM? I certainly did(WYSP). Did you notice any difference in the show after they were told to stop talking shit on Howard's kids? Does that fact make the show any better/worse? Are you telling me that their show suffered THAT MUCH? I know bitching about it obviously makes for funny radio but its not as chicken little as pests tend to make(everything) it.
If anything, "the white haired spinster" would make the XM O&A show better because he has already said he wouldn't want them on XM and FreeShitFM. As an XM SUBSCRIBER, why would you not want an exclusive uncensored show? Do any of you still really believe Free FM has made the XM show better?
Posted by: Schimshamity ? | June 28, 2007 12:42 PM
The CBS segment of the show is a steaming pile of...of....you know....that stuff....that comes out of your backside...when you have to go....and it smells bad....and it's brown.....like....poop.
OH NO! Al dumped out when I said POOP! DID YA GET THAT AAAAAAAALLLLLLLL??
Posted by: MeatFarley ? | June 28, 2007 12:55 PM
momentum building for a merger--I think the NAB has fired their big guns and now its Mels turn--Overall comments way out in front which favor merger
Posted by: gary | June 28, 2007 1:00 PM
Do any of you still really believe Free FM has made the XM show better?
I wasn't in favor of O&A going to C-BS either. I would love nothing more to have O&A as an XM exclusive again, but who knows in these state of affairs.
Posted by: espnjason ? | June 28, 2007 1:02 PM
>>> "Honestly, what exactly did the show "go through"? Did you listen to the show before they got to XM? I certainly did(WYSP). Did you notice any difference in the show after they were told to stop talking shit on Howard's kids? Does that fact make the show any better/worse? Are you telling me that their show suffered THAT MUCH? I know bitching about it obviously makes for funny radio but its not as chicken little as pests tend to make(everything) it."
I agree completely. Greg and Tony just need something to bitch about besides their ratings.
Zero. Point. Zero.
Posted by: MikeHunt ? | June 28, 2007 1:18 PM
the merger is good for xm and sirius.
it may not be the best for greg and tony but that's a bridge they burned a long time ago.
Posted by: d.goezinya ? | June 28, 2007 1:30 PM
I have to agree with MeatFarley about the "Then what happened?" bit. It's a good attempt at cringe radio, but it usually falls flat.
The only thing worse than listening to O &A stretch the "Then what happened?" bit is listening to Hoo Hoo drone for 40 minutes about how he invented everything that's ever been done on radio and how everyone else is just ripping him off.
Besides, the gag order wasn't limited to comments about Hoo Hoo's daughters. (I never heard the comments about his daughters, so I can't speak to them.) It prevented O & A from saying anything about him, even if Hoo Hoo said things about them.
As to the white-haired shyster, he will re-impose the gag order immediately after the merger. He will pack the music channels with commercials after the merger. He will reduce the amount of talk radio and sports progamming after the merger. He will do all of these things to save money and line his pockets with more money. He will also do it to redeem himself with the Sirius shareholders. He will get away with it because there won't be any other commercial-free music, talk radio, or sports programming on satellite radio to compete with him. Most of the listeners will resent/hate all of this, but the majority of them will continue their subscriptions because the programming will still be a thousand times better than the programming on traditional commercialized radio.
Don't say nobody told you.
Posted by: Captain Sludge | June 28, 2007 1:31 PM
doesn't xm have music channels with ads now?
yes mel does nickel and dime everything but the selling point of ast.radio is commercial free music
the only ads i hear on sirius music channels is to try another station.
Posted by: d.goezinya ? | June 28, 2007 1:54 PM
Well said, Captain Sludge. All very good points.
And no, not being able to talk about Hoo-Hoo's kids didn't necessarily make the show any worse. The issue with the gag order is, frankly, Howard showing what a hypocrite he is, and Mel making sure to show that he's Howard's boy. Essentially, it says Howard can say what he wants about who he wants, but Howard's the sacred cow, so O&A better not talk about him, or else.
And yes, XM's hits channels are just as repetitive as those on Sirius. However, their non-hit channels are definitely NOT as repetitive as their Sirius counterparts, especially in the rock category...And from what I've heard on Sirius, they have no one who comes close to being as good as guys like Eddie Trunk, Bill Anderson, Country Dan, George Taylor Morris, etc...Those are the personalities I was referring to, not Rick Dees-type top-40 crap.
I'm still extremely skeptical as to the benefits of the merger, but a couple of the Sirius fans have made some valid points. It just seems, from everything I've read, to be a better deal for the Sirius subscriber as opposed to the XM sub.
Yeah, some of XM's music channels, the ones programmed by Clear Channel, do have commercials. However, to combat that, XM added commercial-free counterparts to those back in April of last year. When/if the CC deal ever ends, all of XM's music channels should again be commercial-free.
Posted by: Wes Derby ? | June 28, 2007 2:27 PM
>>"And no, not being able to talk about Hoo-Hoo's kids didn't necessarily make the show any worse. The issue with the gag order is, frankly, Howard showing what a hypocrite he is, and Mel making sure to show that he's Howard's boy. Essentially, it says Howard can say what he wants about who he wants, but Howard's the sacred cow, so O&A better not talk about him, or else."
Fact is, all we've ever heard is Greg and Tony's version of what was "gagged". Stern only admitted in passing that he shut them up, but never specified. Frankly, I don't think he gives a damn about them either way. Those two idiots were talking shit about his kids so I don't blame him for telling them to shut the fuck up. When they achieve Howard's numbers and following (hah!), they can gag or ignore whomever they want. In the meantime, they'll always be Howard and Mel's bitches. Them and their "pests" need to deal with it and quit whining like a bunch of cunts (again, Hah!).
>>"And yes, XM's hits channels are just as repetitive as those on Sirius. However, their non-hit channels are definitely NOT as repetitive as their Sirius counterparts, especially in the rock category...And from what I've heard on Sirius, they have no one who comes close to being as good as guys like Eddie Trunk, Bill Anderson, Country Dan, George Taylor Morris, etc...Those are the personalities I was referring to, not Rick Dees-type top-40 crap."
I heard some XM music channels recently in my Dad's new Honda and they were admittedly pretty good. I could care less about the DJ's, but the music mix was good and varied. Willy Nelson's channel in particular is one I'd like to have once the merger happens. I hope they continue to use some of XM's program directors after the merger. The hits channels (70's, 80's etc...) did seem the same, however...
I'm loving this new Safari 3.0 text entry feature, by the way... Being able to manually enlarge a textarea box is incredibly useful!
Posted by: MikeHunt ? | June 28, 2007 2:50 PM
I agree with Wes 100%. As an XM'er, Sirius offers nothing I am interested in. (BBC1 may be nice, but not enough to make me give up MLB.)
If the merger fails, so too will Sirius. Their obligations are just too burdensome to sustain with their weak growth and lower subscriber base.
XM's long term plan? Allow Sirius to go belly-up and buy it at cents on a dollar. Sounds good to me.
Posted by: Mark Anderson | June 28, 2007 2:58 PM
I am a sub for both XM and sirius and do not want them to merge. There are things that i like about each that may be lost to changed to a point. I like the fact the XM has almost no DJ and the cross over between stations doesnt happen often (except the pop stations, wes derby made a good point in his post about it) also with Sirius i wouldnt want a station like Faction or Lithium to change or be lost. I think each company need to figure out their own destiny and not think this monopoly will be the answer.
Posted by: FMF | June 28, 2007 3:04 PM
Let me see if I can explain the reason for the gag order in terms that yous may understand....
Lets say I need to give instructions on how to use a tampon. Does it make sense to explain how a man applies a tampon to his vagina? No???? Why not? My instructions aren't applicable because men don't use tampons.
The gag order on O&A was because they were talking about him all the time and he wasn't saying shit(which culminated with them talking about his daughter getting fucked up or something at a party, iirc). He doesn't need a gag order because he doesn't talk about them. Its really that simple.
But of course, you don't have to believe me. Truth has never stopped yous before.
Posted by: Schimshamity ? | June 28, 2007 3:05 PM
Also, all of your assumptions as to what the white haired spinster is GOING to do is based on nothing but your ridiculous dislike for him. Provide some sort of evidence that he'll do any of those things besides how mean and nasty he was to O&A.
Posted by: Schimshamity ? | June 28, 2007 3:08 PM
After the merger everything will be focused on tech advancements rather then integration and content. Using the resources of both company's minus the competition between each other will lead to a better product on a broader sense.
They will be challenging outside company's to compete...They already have the ground work layed, Everything from here are is advertising and Technology. I do think we will be seeing some really sweet things, ESPECIALLY if the merger goes through.
Posted by: dave | June 28, 2007 3:14 PM
Wow - a former FCC commissioner is in favor of the merger...whoop de doo.... He can't vote with the Commission now one way or the other, so his opinion is duly noted and now cheerfully ignored.
You satephiles seem to think that the NAB is the Great Satan when, in fact, it isn't. The one consistent thread running through the entire Sirius and XM saga is broken promises on the part of both Sirius and XM management. They promised one thing and did something entirely different.
Face it, the fix is in and the XM and Sirius merger is seriously not going to happen... least of all next year in a Presidential election year... no politician will publicly go for it... why do that and risk defeat?
Even if this goofy merger idea got past the FCC, which it won't, then you've got DOJ waiting on it and no one over there at Justice seems to believe that this ISN'T a monopoly situation if the merger was allowed through...
Then there are all the court challenges that would come up....so that dog won't hunt.... hope you boys don't lose everything in terms of your Sirius and XM stock... it's coming back like Vaudeville did....
Besides, 10-15 years from now, it won't matter as Internet Radio will rule.
Posted by: Dain Schult ? | June 28, 2007 3:59 PM
You satephiles seem to think that the NAB is the Great Satan when, in fact, it isn't.
True. It's more of a smaller, yapping chihuahua Satan.
Besides, 10-15 years from now, it won't matter as Internet Radio will rule.
BWWAAAAAAAAAHAHAHAHAHAHAHAHAHAHA*buffering*HAHAHAHAHAHA*buffering*HAHA
Posted by: MeatFarley ? | June 28, 2007 4:10 PM
Yeah Dain, a politician supporting a merger that 75% of the public favors would be a disastrous move. The public will be outraged when they get a few extra channels to choose from, and they'll hunt down that dirty politician that allowed it.
Posted by: JB ? | June 28, 2007 5:29 PM
AND THEN WHAT HAPPENED?? They lived happily ever after.. Good night John-boy...
Posted by: harry hardon | June 28, 2007 6:41 PM
>>> The merger will just give subscribers access to the alternate service's channels if they so CHOOSE.
This kind of idiocy is running rampant.
The merger does NOT mean this and isn't necessary to achieve this result. A dual-capable receiver has been developed, and if the merger fails, you'll see it marketed if there is any interest in it.
Posted by: StackPointer ? | June 28, 2007 6:48 PM
I find it amazing that everyone is just taking the companies on their word about what they plan to do post merger with regards to an ala carte option and pricing. First off, if they wanted to offer ala carte programming, they would have done it before the merger. Even now, they do not provide any details about what channels they would give you credit for or how much credit they would be offering. If anyone thinks they can pick just the 5 channels they like of the 170+ channels and only pay $.09 per channel (the average cost per channel per month), they'd be foolish. If they wanted to build good will with this proposal, why not spell it out prior to the merger and let the consumers fully understand what this would mean for them.
Also, I would not expect XM's current music channels to be available to XM customers after the merger and Sirius' music choices to be offered to their customers. The music channels will be merged, with the result being unknown. As others have pointed out, XM's channels offer more depth than Sirius, plus XM's DJs engage the listener in a way that terrestrial radio does not anymore. XMU, Ethyl, 20on20 are just a few of the channels that have a great lineup of DJs. I also like what UPop does, but that's not an XM programmed channel. Nothing on Sirius compares. When I was a subscriber, most of their music channels were voice tracked. Things might have changed, though. The one area that Sirius did do better than XM was with their dance channels.
My concern is that everyone who is in support of the merger are taking people at their word without really knowing the true plans. If they released the details and people saw their favorite channels disappear, or the promised pricing changes be limited to only a few channels that nobody cares about, it would be too late to do anything about it.
I just hope it doesn't go through.
Posted by: Robert Alonso | June 28, 2007 10:30 PM
i want the merger to go through for two reasons:
1) much beetter hardware (synergy of r&d etc), and hopefully better indoor coverage (i miss putting my xm antenna on the floor buried underneath clothes and still getting full signal ;-), something that just isn't possible with my current sirius setup
2) I yearn to be reunited with the true GOD amongst men in the world of satellite radio, Mr. Lee Abrams!!!
Posted by: baldrick5 ? | June 29, 2007 12:17 AM
I thought I had finally shown Stack the light when I explained that he was confused about the difference between the words "monopoly" and "luxury", but apparently I was mistaken.
Stack logic:
They're the only service that carries (fill in the blank niche channel), so they will be able to cut those channels and force helpless subscribers to pay more money. The merged company will suddenly be able to circumvent the fact that they need more subscribers to survive, and thus will do whatever they can to drive away paying customers. They will become more like terrestrial radio, because people are so dumb that they'll pay for the same product they could get for free. I personally don't enjoy the Sirius channels, so therefore no other subscriber should have that choice.
Keep up the good work, buddy. I'm on my way to an MBA, but it shouldn't take a business major to realize that with a luxury entertainment subscription business model, the company is forced to provide the customer with a product that they are willing to pay for over the cheaper (or free) alternatives. If the company improves the service, they will get more subscribers and more money; if not, they will continue to lose money. The merger will not change that. They will still be forced to convince millions more subscribers to pay for the added value of satellite radio, and it won't be easy to sell the service to skeptical customers if they raise prices and cut service.
Once again, the dumbed down version:
Better service = more subscribers = more money for Mel
Cut quality = less subscribers = less money for Mel
Posted by: JB ? | June 29, 2007 2:19 AM
JB, I hope you study a little harder for that MBA because following your equation simply does not apply in the real world. As just one in an almost endless amount of examples that could be given lets talk about call centers. These, especially w/sat radio, are outsourced providing customers with poor service. But they cost less...so more money for Mel. The trick is to provide just enough service so you don't lose the customer but not so much that you're spending lots of money on them.
And shimshithead, you really are a fucking tool. First, O&A only talked about Howie when he talked about them. Howie had them gagged because he doesn't have the chops to respond.
And as for Mel, how about he spell out in detail solid plans for post merger before asking for my support. Maybe he should provide a little evidence of his own because if you look at his track record he will turn sat radio into a commercial fest. That's what he does. He sells advertising. Until I hear details, not snippets of sound bites for Congress, I have full right to be against a merger. And you'd be a fool to blindly support it.
Posted by: PFreak ? | July 2, 2007 11:28 AM