Sirius and XM to merge?
There has been a lot of talk in the financial news recently regarding a potential merger between satellite radio competitors XM and Sirius. Much of the controversy that has been stirred up revolves around whether or not such a merger would constitute the creation of a monopoly or not. Opponents of a merger argue that without competition between XM and Sirius, the subscriber would suffer, as prices would rise and the variety and frequency of new channels offered would dwindle.
While initial rumblings of a merger a couple of months ago were given little chance of coming to fruition by financial experts, XM and Sirius announced on February 19th of this year that they intended to merge, with each company’s stockholders owning 50% of the newly-formed corporation. With the possibility of a merger now a reality, US lawmakers have decided to hold a hearing on the 28th of February to discuss whether or not to allow XM and Sirius to join. Paramount among the questions that will need to be answered is whether or not other digital music providers, such as Apple’s iTunes / iPod combination, or even traditional radio media giants such as Clear Channel, directly compete with XM and Sirius for the consumer’s dollar. If so, then the merger should be allowed, as it will stimulate growth in a nascent industry. If not, opponents would argue, then a satellite radio monopoly will effectively have been created.
Personally, as a Sirius stockholder and a fan of technology both, I would welcome a merger between the two companies. First of all, instead of being stuck between a rock and a hard place just because I want to hear Major League Baseball (an XM offering) and Howard Stern (exclusively on Sirius), I can now look forward to all of the content being available to me through a single receiver. Next, consider the market for built-in radios in new vehicles–an area that has been hotly contested between XM and Sirius in the past few years. I know of a couple of friends who purchased cars that came standard with XM built-in, and who have had to buy add-on Sirius sets that look ugly on their shiny new cars, just so that they could listen to Stern. With one standard, that wouldn’t be a problem.
Now, of course, the argument to the contrary would state that, once the companies were merged, the drive to add new content would diminish in the face of decreased competition. This ignores the reality of digital media in our day and age: that many forms of content delivery now pervade our existences, and they overlap in a very fundamental way. If I decide satellite radio and its subscription format are too limited for my tastes, the iPod offers an appetizing solution–a playlist of innumerable songs tailored entirely to my whims. After all, it was the limitation of terrestrial radio that initially drove people to consider paying $12.95 a month for ‘cable’ radio. Someone on CNN made the comparison today between satellite and regular radio, and mentioned that the latter ‘pretty much sounds the same no matter where you are.’ This is rather ironic, considering that satellite radio stations are actually the same stations no matter where in the country you might be, but there’s always enough variety among the channels to keep the listening experience fresh, unlike with the local Clear Channel affiliate.
The idea that satellite radio doesn’t have any competition from outside of the satellite radio industry is downright ludicrous and backward. Today’s consumer is fickle–quick to leave traditional radio for the content-rich world of satellite radio and the iPod–and just as quick to jump to another source and provider if he or she feels it will offer a more ‘unique’ or ‘interactive’ listening experience. In this ever-changing world, satellite radio, whether in the form of one company or two, will continue to have to re-work and improve their service, if they hope to keep their customer base happy and loyal.
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