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XM and Sirius Finally Allowed to Merge by DOJ Print E-mail
Monday, 24 March 2008
ImageAfter an impossibly long and painful debate by the department of Justice’s Antitrust Division, the number one and number two satellite providers, XM and Sirius, will be allowed to merge - barring approval from the FCC. Lobbyist groups financed by failing terrestrial radio companies fought to block the merger as radio, once the darling of Wall Street along with the dotcom stocks of the late 1990s, are sucking wind with investors and listeners alike. And much like their former lovers, the major record labels, terrestrial radio is now fighting every new technology at every turn. That was a method for disaster for the labels and will not suit terrestrial radio very well either as they are losing their core Boomer and Gen Xer listeners and will never even have a chance to reach the up-and-coming Generation Y users as they have no use whatsoever for the outdated and overly commercial terrestrial radio model.
They simply laugh at the idea of “HD Radio” when you can’t find more than a few stations in comparison to what Gen Y get from the 1000s of free-music Internet Radio stations the broadcast every grassroots niche of music ever dreamed of with no investment and no commercials, just the way the kids like their media today – FREE.

The argument for why the merger shouldn’t have be allowed was that two satellite radio companies together would limit competition. This is a story only a radio guy could come up with. To ignore the 120,000,000 iPods currently in the market is pathetic. To not recognize that most cars today have Compact Disc players installed along with AM/FM radios automatically dismantles the argument that there is some sort of monopoly. If any technology had a monopoly it was terrestrial radio over the past 20 to 30 years. To not see the impact of mobile devices such as cell phones even further weakens the argument the terrestrial radio guys were making as they were hoping their stocks wouldn't dip below $1 per share. Luckily, the Department of Justice Antitrust Division didn’t fall for all of the high-powered lobbying. Some of these terrestrial radio people have some powerful political friends in places as high as in the White House.

The fact is terrestrial radio reaches many many times more people than satellite radio currently and likely for years to come. While the pay radio satellite model has some validity, the two players seemingly couldn’t make a go of it without merging thus they aren’t that powerful – yet. If terrestrial radio cannot find a way to make their content more relevant, targeted and exciting, more and more consumers will jump over to satellite. For the cost of a Venti latte and a scone at Starbucks you can have hundreds of channels of music, news, sports and entertainment that for many today is hard to live without. If satellite radio can find their way into iPods, they will be even more dangerous. They will need to continue to make inroads with car makers, which having only one option to offer will help going forward. Still, as of 2008, FM and AM radios are in every car on the showroom floor. Satellite radio cannot come within a country mile of that in terms of market penetration. With access to everyone in a car the solution to FM radio is simple: fix the content and people might listen. Keep playing the same 14-minute commercial breaks during a “Morning Zoo” and expect people to bail for pay content. Ignore the fact that has been nearly 20 years since the last successful new FM radio format (pick one: smooth Jazz or 1970’s oldies) and you can see just why satellite is kicking radios butt and getting paid by consumers to do so. “Free FM” is a joke to consumers if what you are giving them for free isn’t any good. For millions of fans, Howard Stern is worth the $11 per month. For tens of millions of fans access to every pro football, baseball (formerly an exclusive of XM), NASCAR, NBA and other sporting events makes an even more compelling content argument for why you should cough up that $11 per month. What has radio come up with to fight back other than a bunch of $4,000 suit-wearing lobbyists? Rush Limbaugh? Adam Corolla? David Lee Roth? Simply pathetic.

From the home theater enthusiast’s perspective, the merger of XM and Sirius will likely see AV receivers and AV preamps include satellite radio tuners as a compelling new content source that up until now wasn’t that easy to integrate into a home theater. DirecTV has some of XM’s stations on its airwaves but not all of them. Satellite radio devices for the most part didn’t integrate well with AV systems but now with one choice, there should be more components that make it easy to get satellite’s content into your home theater.

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