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Why an XM / Sirius Merger Doesn’t Even Matter

The proposed merger between Sirius and XM satellite radio probably won’t help the ailing companies. Not everybody is happy about the idea of a merger. Last time I blogged on this topic I looked at how the National Association of Broadcasters were calling the merger a form of government handouts.

 

Just yesterday XM and Sirius have been pitching the merger to the House Energy and Commerce Committee promising the price of the combined services would drop. But that price drop is for the cost of both services combined which is about $25 bucks a month. I don’t think most people who subscribe to one or the other really care to have both. So, effectively this looks like a price increase to me.

 

Current subscribers aren’t going to like the idea of a price hike. But if you like your satellite radio and want to keep it – a merger is likely the only way.

 

The trouble satellite radio will have pitching a merger is that they can’t just consider satellite radio’s competition as mobile entertainment today. They have to consider satellite radio’s competition going into the future and there are some major technologies emerging that make satellite radio look pretty weak by comparison. The cost of wireless digital bandwidth is dropping – how long before Internet radio is streamed to mobile phones? Car stereos have Bluetooth technology so they can stream music from your buddy’s cell phone. City wide wi-fi hotspots will continue to grow, soon most people will almost never leave an area where free wi-fi Internet access is there for the taking. The next step is for your car stereos to automatically obtain an IP when it detects a wi-fi hotspot and sync with your favorite Internet radio station’s playlists. This combined with a monthly music service will make this setup perfectly legal with the FCC and RIAA.

 

Make no mistake – this is satellite radio’s competition and it’s a jungle out there! Even if the companies do merge – it’s probably not even going to matter. Who wants a one way data stream from space when you have access to a free two way data stream?

Get Your Satellite Radio
Published Wednesday, March 14, 2007 7:04 AM by Wayde

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Anon said:

We keep hearing the "free bandwidth everywhere for all" mantra.  

I'm still trying to figure out who is going to pay for this "freebie".  Nothing in life is free, right?  And who is going to pay the recording industry?  XM and Sirius are already committed to paying 10s of millions a year for the music they broadcast.  So, suddenly, all this is going to be free?  The record companies will just say, "Oh, nevermind, if you're getting it via IP, there is no charge"?

There may be periods during which some music is free over limited bandwidth.  But ubiquitous coverage, as is provided by satellite radio?  

As much as the satellite radio companies want us to believe they have all this competition (after all, they can't merge without convincing us, and a merger is definitely what Sirius CEO Mel Karmizan wants), they have one big competitor -- the IPod.  And when IPod users start having to pay for music instead of stealing it, the IPod will look much less attractive to many listeners.

March 14, 2007 11:43 AM
 

XM/Sirius Merger Irrelevant? said:

PingBack from http://crunchgear.com/2007/03/14/xmsirius-merger-irrelevant/
March 14, 2007 12:00 PM
 

Kevin said:

I hope the FCC denies the merger from taking place. XM will eventually come out on top and "Mel and the gang" can scratch their heads as to what to do to catch up.

XM's technology is better, their content is better, their stock price is better.

why they would agree to a merger of equals is beyond me. They are clearly the dominant of the two companies.
March 14, 2007 3:06 PM
 

Mario said:

Yyour argumant makes sense on one level, there are many alternatives, true. And if there service was limited to people who actually went out and purchased a satellite radio, then yes, the technology would go the way of the beta. But in actuallity, the agreements with the car companies is a real driving force of the satellite radio market. Honda and GM have agreements to install millions of these units, and they are becoming standard features in many cars. It's a bit of reverse logic, where the manufactureres are actually pushing the stuff instead of the consumers needing the sat rads, but however you cut it, millions more are being sold each year.

Did you consider this?
March 14, 2007 4:23 PM
 

Orbitcast said:

News bits, links and all-around malarkey for this Wednesday...FCC Chairman Kevin Martin appeared before a House subcommittee on telecommunications today. (Did anyone watch this? Holy snooze-fest. That's time from my life that I will never have back.)
March 14, 2007 4:42 PM
 

Satellite radio over WI-FI said:

Both companies are working (wide known) on radios that will support both the satellite signal and also streaming over internet and receiving in wi-fi spots... that way they can guarantee audio even inside buildings where satellite doesn't work...  by the time wi-fi is widely free and available we will see the new company broadcasting its internet audio over wi-fi to its radios...  Its all about the content not the medium...  This will enable them to package channel groups and sell channel packages since its much easier to set this up in the net than on the satellite medium.
Also, I really don't think the cost will increase as you claim here, because both companies will merge the channels and cut on expenses and operations (meaning you won't end with 340 channels you will end with probably same 170 but with content merged)... prepare for some lay-offs on both sides....  Cost will only go down not up.
March 14, 2007 6:52 PM
 

Dave Stone said:

What a jerk! Satellite radio sounds great on a stereo if hooked up properly. And 15 million happy satellite radio customers today are definitely not as happy with sat radio as they think they are. What? Duh?
March 14, 2007 7:02 PM
 

russell said:

xm radio towers over commercial radio i love it; and its available online
March 14, 2007 7:37 PM
 

Mike D said:

Duh! In case you didn't know, Sirius and XM are content companies, that by the way, can also stream on the internet.  Let us know when you find an internet site with comparable content and ease of use.    
March 15, 2007 5:26 AM
 

Gizmo Cafe Blog said:

Despite the difficulty in taking on a now-consolidated foe, there is a new, multifaceted opponent ready to diversify the satellite radio market.
March 15, 2007 10:28 AM
 

Wayde said:

Mario, good point about the auto industry getting into the satellite radio game with their car stereos. It's a great revenue source for XM and Sirius.

Other comments I've seen here and in other places seem to be saying (to paraphrase) :

"Satellite radio companies are prepared to compete in arenas outside the conventional one way data stream from space market. ie. wifi, Internet, terrestrial broadcast."

This supports my only real contention - that satellite radio is desperate due to might tough competition. That's exactly what XM and Sirius are themselves trying to say is their reason for merging.

When satellite radio came out - it was different. We already have Internet radio and terrestrial broadcast. Will satellite radio have anything to offer by changing its delivery method? I don't think so. That's why I think it won't be long before satellite radio is a quaint relic of the past.
March 16, 2007 10:18 AM
 

Chris said:

I agree.  I don't think sat radio will make it in the long term.  Too much music is repeated.  They loop the same artist all the time.  The talk, and news type things are good, but the music is lacking.  The technology requires you to buy too much costly equipment, and of course they charge you for every accessory. It should be sold with the radio.  Even if the merge happens I think this product will end up drifting in the wind.  Other better choices out there to choose from.  Less equipment to buy, and you don't have to worry about some signal in the sky.
March 16, 2007 4:13 PM
 

Gizmo Cafe Blog said:

The official King of Shock Jock radio – known for his stripper interviews and “smallest wiener” contests – is now asking U.S. pop TV fans to help throw American Idol.
March 23, 2007 9:39 AM
 

*** said:

I love my satellite radio - and with auto manufacturers installing it in the new cars, it doesn't look like it's going away. I have always seen Sirius as "Johnny-come-lately" which usffers from poor content compared to XM. I figure XM will out-compete Sirius because of their superior content, so Sirius seems to be the one suing for "peace" by attempting to join up with their major competition in order to try to survive with at least something. Wi-Fi hot spots and all that are "fine" if you live in a city and have invested in considerable costly hardware to take advantage of that technology. For those of us who live in sparsely populated areas, or for farmers working their fields, or men in the oil field, and so on, having reliable good-sounding radio available "wherever you are" is a mighty big PLUS, and the cost of the equipment is highly reasonable for what you are getting. NO, satellite radio is not going away - you "city people" need to get your head up into the sunshine and see that there is a larger world out there than your pitiful little cities!!
March 26, 2007 12:14 PM
 

kate said:

*** dis hsit u u aint gonna do dat

April 27, 2007 1:02 PM
 

Jim said:

The competition for satellite radio is free terrestrial radio. People have the option of cancelling their services to satellite radio if the price increases too much.

July 11, 2007 2:10 AM
 

Fred said:

There are vast areas in North America that do not have terrestrial radio available, let alone WiFi or any other form of wired or wireless data services. There is most certainly a demand for satellite radio that will not go away any time soon.

What could really enhance the satellite radio landscape is the redistribution of conventional terrestrial readio stations via satellite. After all, your cable companies and satellite television companies produce very little original content but redistribute quite a few station that already exist.

August 7, 2007 11:25 PM

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About Wayde

Wayde’s super power is fixing electronics by smacking them. Fixing his way through college he repaired TVs - monitors, stereos and even a pinball machine. He was finally defeated by arch nemesis - Planned Obsolescence in issue #280 and now enjoys super-hero retirement as an editor and gadget blogger.