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Will Satellite Radio Get In The Terrestrial Game? Print E-mail
Thursday, 08 March 2007
Among satellite radio’s early adopters, the difference in programming between XM and Sirius is up for debate and a matter of personal taste. Both systems are good and have unique draws for consumers to consider before signing up. I have been a subscriber to both systems and prefer Sirius’ programming specifically because of their musical programming and the added bonus of Howard Stern repeats on the weekend. One thing I can say in terms of signal strength, XM worked far better, especially during my nine to 10 minute drive-up a long canyon here in Los Angeles. Despite navigating through sometimes narrow, mountain passes en route to my property there are easily a dozen drop outs, which ironically isn’t the case with my Sprint cell phone. With XM, the service up the canyon wasn’t perfect but it was significantly more reliable. How is it possible that one satellite system has so much better coverage than another when both are beaming in from high above? Perhaps its because they aren’t always beaming in from outer space. One element, radio industry insiders tell AVRev.com that made XM such a tasty acquisition target was their terrestrial repeater system. From right here on Earth, XM is better able to cover more geographical area with more stable service than Sirius. This physical advantage might also become a real problem when trying to get FCC approval for the pending merger. Expect that the terrestrial radio people will scream bloody murder that satellite radio wants to get into their local markets. Gone are the days of true regional programming and any level of diversity in terms of programming on terrestrial radio. Satellite might very likely try to attack this weakness and eat terrestrial radio’s lunch while the terrestrial companies are still paying the debt structure on the billions of dollars of radio stations they bought during the days of the dotcom boom. While their stocks soared then, the reality of niche broadcasting has consumers looking for, and more importantly paying for a better radio product.

Beyond creating regional content like traffic, news and entertainment, the proposed merger also offers Sirius the ability to sell off some of the redundant satellites to other companies and or expand the service. There is precedent from the European market for merging satellite companies to cut costs and sell off satellites already in space, which could in this case provide both better coverage and reduce debt for the new company. While consolidation hasn’t been good for the radio or music business in traditional radio, it is yet to be seen if it will help matters in the growing world of satellite radio. Car manufacturers will have one choice to integrate. Hardware companies don’t have to worry about making both systems work in their electronics and consumers don’t have to deal with a Beta versus VHS format decision when looking for better audio entertainment. In the end, the increased simplicity might make the deal a good idea while also lighting a hot fire under the asses of the executives who run a dying terrestrial radio business. If traditional radio got back to their roots, there are still millions of listeners who would tune back in, assuming the content and programming got better. At this level the consumer has a win-win.

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