Now Hear This Electronic Newsletter, September 20, 2007 Posted
by Bob at 09/20/07 10:44 AM
It's probably fair to say that Radio Shack and Circuit City are not the first names that leap to mind when it comes to gauging consumer benefits.
But supportive words from the two big electronics retailers and others are being widely touted by XM and Sirius this week as proof positive that the proposed merger of the country's only two satellite radio providers "would result in consumer benefits." (Click here to read an XM/Sirius press release on the matter.)
Don't get us wrong: We cherish our longstanding membership in Radio Shack's battery club and admit we have often found the open box bargains at our local Circuit City irresistible. They are both very good at what they do, which is selling their stuff.
Among the items electronic retailers are selling a lot of these days are satellite radios, all of them boldly emblazoned with either a Sirius or XM logo. The retailers make a lot of money selling and installing those radios -- and Sirius and XM subsequently collect lots of monthly fees to provide programming for those radios.
Those monthly fees have not been sufficient for either company to ever turn a profit, however, which is why they say they now need to be given special dispensation to merge into a monopoly. Many observers have pointed out that those financial woes are due to lousy business moves, such as Sirius's huge, multi-year deal with shock jock Howard Stern.
Circuit City and Radio Shack are not the only business partners whose support XM and Sirius say somehow translates into a clamor of "consumer" backing for the deal. XM and Sirius are also bragging about some auto manufacturers who have hopped on the bandwagon for the merger, including Honda, Toyota and Hyundai.
According to XM and Sirius, here is what it all means:
"These supportive companies have a keen understanding of their customers and drive sales and business by catering to the interests of consumers. Their support sends a clear message that the combined company would be welcomed by the American public."
Consumers Union, the sponsor of this blog, is one of many public interest groups which are opposed to the XM-Sirius merger.
The reasoning is really pretty simple. The deal would combine the country's only two satellite radio providers -- who now compete quite aggressively for customers -- into a government-sanctioned monopoly. Monopolies are not good for consumers. (Click here to get more information on the proposed merger from www.hearusnow.org.)
In an effort to win support for the deal in Washington, Sirius CEO Mel Karmazin has pledged to keep rates low following the merger. He has also proposed to offer tiers of programming at differing rates, instead of an all-or-nothing package. Those assurances have some Wall Street analysts predicting the deal will gain government approval, possibly by the end of the year.
We are highly skeptical of promises from XM and Sirius -- and with good reason. Both companies pledged not to merge when they were granted their licenses to begin setting up their satellite networks in 1997. That should make it pretty obvious that their promises don't mean very much.
Both the Justice Department and the Federal Communications Commission have to approve the merger for it to happen. Congress is also expected to have a say, although it is not part of the official approval process.
As for XM and Sirius, we would like to offer a little bit of advice should they be interested in finding out what consumers really think about their proposed merger: Ask some actual consumers rather than their corporate cronies.
We bet they can find a bunch of them down at their local Radio Shack or Circuit City.
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Why Should Consumers Be Concerned About Rupert Murdoch?
Consumers Union Vice President for Federal and International Affairs Gene Kimmelman says Rupert Murdoch and other media moguls are bad for democracy and consumers. Click here to read his explanation why.
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comments
(10)
1
Posted by Florence E. Portell at 09/20/07 05:05 PM
XM and Sirius should never merge. Frankly, if they do we can't afford to pay an increase in the XM service and will definitely have to cancel. We aren't the only ones feeling like this. We are retired and other retirees are seeing increases in everything and living on retirement dollars that never increase is forcing us to cut back.
To say there would not be an increase in service is ridiculous. Without competition this would be a monopoly and consequently they are in full control and this means price increase no matter what they say now.
2
Posted by John Sinton at 09/20/07 05:56 PM
I am a user of both XM and Sirius radios. It would be a great improvement if they were combined into one offering. Both must still compete with many other forms of communication: web, over the air, tv, etc.
3
Posted by Helen Chezem at 09/20/07 08:30 PM
I am a consumer and I am NOT in favor of a merger. Prices always seem to rise not too long after a merger. Companies say there won't be increases, but this usually lasts only for a short time. When there is no competition, there is no reason for you to not raise your prices. The consumer has no one else to turn to. Whatever happened to your promise in 1997 that you would not merge? If you pay big bucks for someone like Howard Stern, you are putting your company in jeopardy. I would think that you might have to have some serious advertisers to make up for your poor business practices. Don't use this consumer's dollars to make up for your losses.
4
Posted by Marilyn Brown at 09/20/07 10:22 PM
I feel that there should be more small stations. We used to be a Sirius and XM household. Sirius dropped two stations that I wanted to listen to, so I dropped them. That is both of our rights. We should have choices. The wohle radio business is ruled by money...not by what people want to listen to. Ownership has its privledges. I want more small, independant, local stations. Break up these monopolies.
5
Posted by Dan Stokes at 09/21/07 08:33 AM
I have been a subscriber to Sirius for almost two years now. Naturally, I believe the opinions of people like me are the ones that should matter. As far as I can see, I and EVERY OTHER CUSTOMER is thrilled about the prospects of this merger passing. This includes everyone I know and everyone I've heard of. The FCC recently asked the public for comments about what they think, and about 3 out of every 4 supported the merger. There was even a poll taken recently that showed 75% of Americans favoring the merger's approval. The only opposition comes from the lobbyists at the NAB, who despite what they tell you, want the exact opposite of what's in the consumers best interest. Why do they spend millions lobbying against the merger? Because they compete with satellite radio and want to stifle any increase in competition. Obviously, the merger would not create a "government sanctioned monopoly" (lol) if there is significant competition.
Sirius/XM MUST add new subscribers to be successful. And if the the NAB propaganda is true, they will have a harder time doing so with "increased prices" and "decreased quality". The folks at Radio Shack and Circuit City know that that won't happen. After all, they want to sell radios, correct?
The bottom line is, stop listening to lobbyists, and start listening to consumers.
6
Posted by Jay at 09/21/07 11:32 AM
Dan Stokes 9-21 posting states that in a recent poll, "75% of Americans favoring the merger's approval". Who conducted this poll? Were they in any way connected to either of these satellite stations? How many were polled? How many of those polled are/are not subscribers to either station? I doubt that this was done randomly by one of the recognized pollsters. That being correct, the poll is a fake!
7
Posted by George Shaeffer at 09/21/07 02:32 PM
I don't see any reason for a merger. It was just a few years ago that the giant oil companies came crying that they had to merge to survive. Look at how big a lie that turned out to be! If Sirius and XM are so worried about making money, let them sell advertising. They sell advertising on cable tv and everyone still pays for it because of the greater number of stations and different programming available. I do think that the receivers should be able to get both services - I don't have to buy a separate TV for each network.
8
Posted by Whit Haggerson at 09/21/07 08:05 PM
Do not merge these two services!!!!!
9
Posted by JODY f at 09/22/07 09:56 PM
i refuse to pay for radio.
Howard Stern got a bundle.
I disrespect Radio Shack and Circuit City and will not shop there.
10
Posted by Jack Payne at 10/08/07 10:25 PM
I believe these two are deep into stock options for their employees. I may be wrong,but if so, the coming shake out of these scandals looms over the head of this merger, I would think.
