A new look at the XM-Sirius merger

investors need to buy more siri stock,i dont want to give 4.6 shares for1 do u

In my opinion the merger of XM and Sirius Satellite Radio should not be approved. If it is it will be turn a duopoly into a monopoly; a monopoly that will occur by default anyway if it turns out to be true that the two stations can’t survive the competition, as they both argue. Myself, I have been waiting for this merger to fall through so that I can sign up for Sirius and thus get both Sirius’s blues channel as well as XM’s blues channel. But if the merger does go through the Sirius blues channel and the XM blues channel will be merged into one, as will “many other supposedly ‘duplicate channels.’” Note that both blues channels are on channel 74! It’s clear that Sirius and XM have been planning to merge since the day they promised not to.

In today’s (Saturday 11/24/07) New York Times there is an article entitled “Bland Menu if Cable Goes à la Carte” by Joe Nocera at:

http://www.nytimes.com/2007/11/24/business/media/24nocera.html

This article debunks the notion that à la carte pricing will reduce costs. It states that in 2004 at the request of Congress the then chairman of the F.C.C., Michael K. Powell who was known to be “a champion of deregulation,” was asked by Congress to look into the feasibility of à la carte pricing. So he had the F.C.C.’s economists work up a study which concluded that à la carte pricing would have “the exact opposite effect from what its backers claimed. It would cause cable bills to rise for most people. And it would cause many channels to go out of business.” Applying the conclusions of that study to the current case of the proposed merger of the satellite radio stations, it’s clear that the two blues channels I am trying to prevent from merging into one, would almost certainly suffer this fate. Then in came F.C.C. chief Kevin J. Martin who immediately ordered a “redo” of the original study. He was then accused of “doctoring” the numbers to get the result he wanted, but when it came up for a vote in the Senate Commerce Committee his interpretation was voted down by “20-to-2.” His agenda had basically been to give parents the ability to block what they considered objectionable material from coming into their house as part of a package deal. Since it is already within the admitted capabilities of both satellite stations to block channels, there is no need for a merger to take place to make it possible for them to do this. And who do you think most parents would be eager to block? Why Howard Stern of course. I’m digressing here and not in support of my own argument, but I don’t understand how the F.C.C has any jurisdiction over what rains down on the earth from space, but if they lacked this jurisdiction it would subvert my desire to have them block the merger. So more power to them, at least in this case. There’s more to the article, if you’re interested you can read it at the link above.

There is also the potential solution used when two competing newspapers in a given market claim they can’t both afford to operate independently. They share their presses and distribution networks while maintaining strict editorial independence. In the case of satellite radio this would mean sharing satellites etc. but strictly maintaining programming and pricing independence.

In conclusion, those in favor of the merger either own stock in one or both of the two satellite companies which they hope will increase in value or they are consumers who are woefully naïve about the benefits they expect to receive if the merger is allowed to go through. And finally, satellite radio does not have any terrestrial competition, regardless of how loudly proponents of the merger say it does, basically there is no terrestrial radio. In fact there is no other medium which you can listen to while driving from coast to coast that will play commercial free music in the genre of your choice, without you having to procure it in advance, while at the same time introducing you to new music. It’s not a coincidence that the major investors in satellite radio are the automobile manufacturers. They know that satellite radio is tied to the mobile radio market.

The Sirius and XM merger must be approved else we stand to lose two important companies in the music/talk distribution space. While one would argue that this would create a monopoly, the industry definition must be expanded to include all audio distribution and not just satellite radio. I have yet to see a valid argument that details exactly how the combination will hurt consumers rather than improve their lives and American society as a whole.

The DOJ and FCC must consider:
1) There are many other viable substitutes to receiving music and talk content – e.g., iPod, terrestrial radio, cable television, cellular telephony, Internet radio, etc. This combination will not hurt consumers but help them since the combined entity will reduce the overall costs associated with running two companies; thereby passing along the savings to the consumer. Currently, the consumer is at a loss because in order to get all of the channels on both services, one has to pay for two units and two subscriptions… they can not receive NFL, Nascar, NBA, MLB, etc. all from one service. The satellite radio industry first needs to create a single platform on which all channels can be broadcast – it needs a standard in order to survive (think VHS vs. beta… there needs to be consolidation). One can argue that if the combined company controls all of the channels, then they can increase the overall price; however, do not forget the consumer still has the option to not subscribe to SatRad at all, and use another form of content distribution such as television, Internet, etc. (as it stands currently);

2) If the satellite radio industry does develop and become profitable, others can step in and apply for licenses thereby expanding the entire pie;

3) The NAB clearly feels that this combination is a direct threat to their livelihood – this justifies the fact that competition still exists and this that combination is not a pure monopoly when applying the correct lens to define the industry;

4) To block the merger will be detrimental to the American people/society as a whole. Likening the current form of this media to Public Broadcasting, by blocking the merger, the industry is sure to collapse (based on financials), leaving Americans with even less choices. What Americans listen to will not be based on what they are willing to pay for but what big business believes to be mainstream, popular content driven by ratings (through purchase of advertising spots). This will cause a music/information downward spiral, whereby Americans will not know what is being censored from them. This is a case where capitalism negatively impacts access to information… if it’s not popular with the masses, it goes away à very dangerous when a select few decide what is popular thought… especially when driven by profit.

Like cable television in its infancy, if this industry were given the support and protection it needs to develop, I can foresee a future whereby which the satellite beams are merely the form of distribution; the two companies eventually offload the content to be managed by companies that produce and manage it (like the state of the cable industry today). This combination may very well spur larger scale competition with telephone providers (that now offer TV and Internet), cable providers (that now offer Internet and telephone), and satellite television providers thereby, improving the lives of Americans on a multitude of levels.

This merger must go through!

MERGER, Is Not A Winning Arguement, For The Consumer, Or Market Place.
MORE CHOICE?
Hardly, If Combined, Your Choices Are What Ever The CEO Thinks Is Best For SATRAD.
No Real Choice, Here.
CONVIENIENCE, Maybe--You Could Get Stern On Both.
MARKET CENSORSHIP--YES.
One CEO's Opinion, For All SATRAD, Is Censorship.
INCLUDING NEWS AND INFORMATION.

ECONIMIES OF SCALE, Not Likely,
They Said They Would Be Profitable, With 2 Mil Subscribers, Then It Was 4 Mil, Now, With 8 MIL Each, They Are Almost A Billion In Debt.

UNFAIR COMPETITION
How Can Any LOCAL RADIO MARKET, Compete With A National Provider, With That Large Of A Budget, And To Top It Off.
SATRAD Has No Restrictions On Content Language
TERESTRIAL, Is Limited To Family Values.
So, Terrestrial Can Not Carry Adult Themed Humor, Or Anything Else.

SATRAD Is Serving out Local Traffic, And Weather, And Competes As A Local Provider In EVERY MARKET. With a Monster Budget.
IS THAT FAIR?

Let Two Battle For The National Market, Not One
MONSTER, With ONE Ego, As To What You Will Hear.

Let the Market Decide What Belongs On Satrad.
That's Only Possible With TWO Independant Ownerships.

EMIL J KOVACH JR