Slacker throws down: Asks for merger conditions
Monday, July 9, 2007 at 1:12 PM
Tags: 2, XM
Slacker, the growing internet radio-turn-satellite service, has filed a comment with the FCC asking for specific conditions regarding Sirius and XM's partnerships with auto manufacturers, should the merger be approved.
As Slacker is a new personal audio service, they're asking the FCC to impose two conditions should the merger be approved:
- The combined company should not be allowed to continue, or enter into any exclusive agreement with auto manufacturers. In other words, they need to terminate any exclusive agreements they already have.
- The combined Sirius-XM should not be permitted to have car manufacturers represented on the new company's Board.
Remember that when Sirius and XM announced the merger, they stated that the board of directors would consist of one representative from each of General Motors and American Honda.
Slacker was careful to explicitly state that they take no position regarding the proposed merger, and that they don't consider themselves to be a substitutable service to Sirius or XM.
In their comment to the FCC, Slacker went into great lengths to highlight the tightly knit relationships between both satellite radio providers, auto manufacturers and their OEM agreements.
Slacker is asking a lot here, and has definitely thrown the glove down... though you honestly can't blame them. If the FCC gives these requests serious consideration, it very well could delay the entire process. Because, since it's been the basis of their business model for years, you can bet that Sirius/XM would vehemently oppose any restrictions on their OEM agreements.
My only problem is that the "exclusive" logic really only applied to each other, not competing audio technologies. If the auto manufacturers were truly married to the exclusive concept, then there wouldn't be any iPod integration, or HD Radio installations, as we're seeing today.
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Comments
WOW... WHO SAW THIS COMING.
Posted by: Craskill ? | July 9, 2007 1:36 PM
A totally sensible request, but one that obviously won't happen.
A [really big] thing Slacker doesn't have is OEM relationships, and XM's & SIRI's essentially "get in the way" of Slacker cutting a deal.
XM and SIRI both have far too much invested in these relationships to just let them go. And the deals are far too attractive to the OEMs to void the contracts. So, they'll stand.
Most interesting, however, is Slackers point of view that they do not comprise a "substitute" for satellite radio. This remark, more than anything else said, gets to the heart of the matter WRT whether a merger might be approved.
Posted by: StackPointer ? | July 9, 2007 2:37 PM
If they don't consider themselves a substitutable service, then why do they care? Don't get me wrong, I think it is a completely reasonable request, since any OEM contract that prohibited Slacker installations would obviously limit the customer's choices. (This is the general theme with exclusive contracts.) But to say "We're not competition, but you need to enact these requirements to preserve emerging competition" is disingenious. They know very well that if their product comes out as advertised, they will grab a lot of listeners away from Sirius and XM.
Posted by: JB ? | July 9, 2007 3:18 PM
Eh. No one really cares about Slacker and I doubt the FCC will. They might matter in the future, but right now they're completely inconsequential.
Posted by: MikeHunt ? | July 9, 2007 3:39 PM
>>> If they don't consider themselves a substitutable service, then why do they care?
The best explanation for this is what I (and others) have tried to say here and elsewhere -- being a "substitute" within the meaning of anti-trust law is not the same thing as just being a "competitor" in a broad sense.
XM and SIRI are trying to redefine the term to meet their own needs, i.e., so that the merger will be allowed. But to be a "substitute", you have to be able to deliver essentially the same services, which would include, for example, realtime content as well as OEM-installed versions of the hardware. Hanging an additional box on my dashboard (e.g., Ipod or Slacker) to get music content is not an adequate substitute for a device that comes built-in and tightly integrated with my in-vehicle stereo.
FURTHERMORE, (and a point I've not seen made to date), there is no substitute for XM's weather and Navtraffic services period. You cannot get a substitute for either of these integrated with your navigation system in your new Nissan or Toyota.
Posted by: StackPointer ? | July 9, 2007 3:55 PM
Should XM be split into 2 companies then, so they don't have a monopoly on weather and Navtraffic services?
Posted by: JB ? | July 9, 2007 4:10 PM
I like how Slacker thinks they should be listened to. They've just lost my support for their product.
Posted by: Michael | July 9, 2007 6:35 PM
Maybe we can make Slacker a government subsidized company so that everything can be "fair".
Next instead of stock prices we can just use happy face stickers to indicate how a company is feeling about itself.
Posted by: Scooter Libby | July 9, 2007 6:43 PM
The whole thing is bogus. I looked at my annual report and the exclusive agreement is ONLY that the automaker can't install a competing S Band satellite service. Slacker used Ku band so they are not affected by the exclusive. They probably don't want to pay the kind of bounties that XM and Sirius pay....so if they can kill those off maybe the automakers will take a smaller amount of dough to install Slacker.
What a crock.
Posted by: CM | July 9, 2007 9:35 PM