Consumers Must Be Protected in XM/Sirius Merger Posted by Bob at 02/20/07 02:19 PM

Like lots of folks, we aren't yet sure what to think about the bombshell announcement by satellite radio competitors XM and Sirius that they want to merge.

At first blush, it's hard to imagine how such a business marriage would benefit average consumers -- the primary yardstick this blog uses to measure a big deal like this.

Consumers who want satellite radio now have two choices, XM and Sirius. That is a far cry from a fully-functioning competitve marketplace like there is for, say, washing machines, where consumers have dozens of brands and models to choose from.

Still, two competitors are almost always better for consumers than a monopoly. Sirius is a lot less likely to raise its prices if it thinks it will bleed customers to XM, and vice versa. Likewise, Sirius and XM are a lot more likely to offer better programming if they are competing with each other for customers.

XM and Sirius are expected to face an uphill fight in convincing government regulators to approve the deal, and that is as it should be. The Federal Communications Commission included language specifically prohibiting XM and Sirius from merging when it originally granted them permission to offer satellite radio services several years ago.

FCC Chairman Kevin Martin struck the correct tone in a statement he made in response to the merger announcement on Monday.

"The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices," Martin said in a statement.

We hope that Martin and the other members of the FCC will stick with that litmus test when the lobbyists from XM and Sirius come calling. We also hope that Congess will step in immediately if the FCC should waiver in its commitment to protecting consumers in any deal between XM and Sirius.

comments (3)

1 Posted by Teri at 03/03/07 12:32 AM

March 1, 2007

Earlier this week, I watched the Judiciary Committee hearing on the C-Span network. Sirius's CEO didn't fool me as he tried to convince the senate that if the deal to merge XM & Sirius were approved, the company would not become a monopoly. Nor did I believe him when he said they wouldn't raise prices. This is entirely False, and a bad deal for consumers if the deal were approved.

Don't be fooled. Sirius/XM would raise rates because they would be the only satellite radio in existance. Especially once they gain larger chunks of market share, the fear of loosing subscibers lessens. Customer service will likely falter, and the probability of customer abuses would likely increase because there's no other game in town.

As Sirius's CEO attempted to convince the committee they would not become a monopoly because they compete with traditional radio, HD, computer radio, and even IPods. It appeared to me that some of the senators and reps were becoming somewhat perplexed by this statement. I on the other hand see it quite clearly.

Although these two radio satellite companies compete to some degree with traditional (free) radio companies or other modes of media, satellite is satellite. It has it own intrinsic set of attributes which distinctly sets it apart from traditional radio, or any other media for that matter. It is for this Very reason that XM and Sirus has a marketable product to begin with.

For starters; satellite radio provides a subscriber radio service for $12.95 per month Plus specific hardware that must be purchased by the subscriber. Secondly,the service consists of uninterrupted, unedited programming void of commercial advertisements, contests, gimicks,or disc jockies. Because it's satellite produced,
programming is consistant thoughout a much larger area versus the limited range of signal through a local (traditional) radio station.
And lastly,satellite radio offers a wider variety of programming not available on other broadcast networks.

These are the specific and unique differences which sets satellite radio apart from all other media, and why subscribers pay $12.95 per month, and fork out large sums of money to purchase the hardware required for satellite radio. Moreover,it would set a clear precendent for other companies seeking merger approval, that the feds are relaxing the very rules set forth to foster competition and protect consumers. I hope the FCC and our politicians see this merger for what it really is and vote No.

Thank you.

2 Posted by eun at 08/22/07 01:32 PM

yeah, while you're worrying about consolidation of an infancy business that would likely expire if not consolidated, the government is monopolizing everything else under the sun...you idiots. Duh...like energy, bioalternatives, cable services, phone services, natural gas services, and on and on! Its a little late, and misplaced, to be beating on the table now!

This is more about the hopes of the neocons (trashy, greedy republicans) to continue to squash free speech, and avenues of free speech. They know XM and Sirius would have a hard time surviving if they did not merge, if they could at all. Which would you rather see, a crippled new industry with no new hope of survival, or an evolution of that business that must commit to the public on cost, programming, and content.

Satellite radio is a unique venture of which the gov. is suspicious of since it has fewer strongholds on this industry, as compared to regulated public airwaves. Look at who is supporting NOT allowing the merger...have these companies been your friend in the past?? I think not. Got a clue yet?

Where were you idiots when they allowed further consolidation of the media industry 4 years ago? This is when you should have been flapping your jaws. Take a look at the proponents of consolidating the media industry, and compare them to the opponents of satellite radio...see anything yet??

I swear, Americans are so naive, they exude in stupidity.

3 Posted by Shawn at 09/05/07 04:46 PM

I believe the FCC should allow the merging process of Sirius (SIRI) and XM-Radio (XMSR). I find this to be my belief because both companies are eating each other alive. Because of this, they are bankrupting themselves thus providing substandard service to their clients. A merged form of Sirius and XM-Radio would help alleviate this issue. Let the market decide whether or not Satellite Radio will survive. Satellite radio is not a homogenous product. People still have alternatives. Both companies have a hard enough time competing against radio stations, internet and handheld devices, not to mention both companies' satellites are failing in orbit and are having a hard time launching new ones. Radio has never been my friend of mine because they play the same garbage over and over again. Internet radio is a heavy threat to satellite because 67% of American population uses computers and have an internet connection of some type. Companies such as Apple, RCA, Samsung, LG, and Sony probably will not be hurt by the merger due to the huge world-wide demand of handheld electronics. It's like ciggerettes and candy. People are going to keep buying them even if ciggs. are offered in the form of pure nicotine and candy is offered in the form of pure sugar. Oh wait, people do buy those too and to a very large extent. Even if all of the bubble gum makers were to merge, people would still buy sugar and pure nicotine and vice-versa. So, you can conclude that even if the FCC approves the merger, customers still have a choice. Customers for years have been dealing with junky radio situations. You probably did it today in the car and did not think twice about it. I'm tired of being used to it. I'm ready for a better radio selection. If the majority of the population do not like these two companies merging together, many venture capitalists still have plenty of funds to create a new satellite radio company. If over a trillion dollars can rotate through Wall Street every day, I think there is room for a better, merged form of satellite radio. The customer is king either way.