I’d like to know the thought process behind this move:
District-based XM Satellite Radio Holdings Inc. and New York-based Sirius Satellite Radio Inc., which together control the emerging satellite subscription radio market, today announced that they plan to merge in a $13 billion deal.
Mel Karmazin, the chief executive of Sirius, would become chief executive of the new company, and Gary Parsons, the chairman of XM, would become chairman, the companies said. They also said they would retain operations both in New York, where Sirius rents space, and in Washington, where XM owns a building.
Such a merger would face significant regulatory scrutiny and questions about whether a monopoly was being created and would take months to complete. The companies hope to complete the merger by the end of the year.
“The commitment of the company is to have a significant, presence both in Washington D.C. and in New York City,” said Hugh Panero, currently chief executive of XM Satellite Radio.
No decision has been made on the eventual name of the company or on the location of the headquarters. Both subscriptions will be honored and then they will eventually be combined, the company said.
The two companies, neither of which is profitable, have been rumored to be in merger talks for months. Both face slumping subscriber growth rates. (emphasis mine)
…que?
I’ve got a theory as to why they aren’t profitable. Here goes: the type of people that wouldn’t be hesitant about paying for radio, no matter how sucky the free kind gets, are generally the same ones that are well-off enough (and/or dumb enough) to buy a new car these days, and both companies have made deals w/ car manufacturers to include it w/ their cars. Everyone else either is just fine with free radio, doesn’t think it’s worth the price despite how bad the regular kind is, or uses a CD or an mp3 player instead. If the prices got low enough, then some would come around to it, but they vastly overestimated how popular satellite radio would be — hence why they started by throwing gobs of money out for star power — so they can’t lower it; if anything, they wish they could raise it.
Monopoly? Of course it’s going to be one, for the simple fact that the average person, if they have content to provide, tends to not have the money to launch a freakin SATELLITE. In contrast, radio spectrum can be accessed by damn near anybody, which is why it takes FCC strong-arming to prevent everyone and their mother from having a radio station. The only way competition would be feasible in satellite radio would be if there were public-access satellites* where all anyone would have to do is send their signal to it and it’d go to whoever the hell wanted to hear it.
(* – Out of curiosity, I did a Google. Apparently there are some satellites for amateur radio use [some info is mentioned here], but from the sounds of it it’s not that effective. Though, I’ll admit, I had a case of IARATS-syndrome** right away.
Anyone out there who knows more than I do about it [read: pretty much anybody], give a holler.)
(** – “I ain’t readin all that shit”)
