FCC Nixes Satellite Radio Merger

a_nonamiss writes "Doesn't look like Sirius and XM are going to merge any time soon. I'm not sure how I feel about this one. Logically, I know that competition is a good thing for consumers, and monopolies are generally only good for companies. Still, I don't like having to choose a car based on which satellite radio service comes pre-installed, or considering whether I'd rather have Howard Stern or Oprah, because there is no practical way to get both. Frankly, it's probably all this exclusivity that has caused me not to purchase either system." From the article: "Federal Communications Commission Chairman Kevin Martin told reporters after an FCC meeting that the Commission would not approve a merger between satellite radio rivals Sirius and XM Radio... When the FCC initially licensed the two satellite radio companies in 1997, there was language in the licensing barring one from acquiring control of the other... Even if the FCC were to have a change of heart..., it would still have to pass antitrust scrutiny by the Department of Justice."

Comments

FM or AM?

[MightyMait]

I can see the point of having competition, but having incompatible hardware is going a bit too far, isn't it?

What if, during the early days of broadcast TV, you had to chose between UHF and VHF? Or, with terestrial radio, FM and AM?

Seems kinda screwy!!

Sirius != XM, merger would utterly suck

[Miamicanes]

People who subscribe to neither Sirius nor XM don't seem to be aware that the differences between Sirius and XM go far beyond Stern vs Oprah, and NFL vs Baseball.

Sirius's music channels are generally programmed like "normal" radio stations, but without the commercials. They have DJs, Top XX countdowns, and playlists. Sirius generally appeals to people who hate the endless commercials or have musical tastes that vary from the local market norm (ie, someone into garage alternative or trance forced to live in some horrible small town or rural area where half the local stations are country, and the other half are religious), but are perfectly happy once they discover Sirius and get to enjoy the kind of radio that used to be available only to people in places like New York and Los Angeles.

XM's music channels are mostly jockless (no DJ) and have significantly deeper playlists. XM's subscribers call it "non-repetitive variety without intrusive, annoying chatter" and view it as a huge advantage over Sirius. On the other hand, most Sirius subscribers feel like they're listening to a CD player where someone put in a stack of CDs and hit the 'randomize' button when listening to XM. Different strokes for different folks.

The fact is, if XM took over Sirius, or Sirius took over XM, and the victor used the additional bandwidth to improve audio fidelity or add video services, and pretty much wiped out the other network's channels and format altogether, I *guarantee* at least half the losing service's customers would be gone within 3 months. Probably a third would be gone the moment their current month ended. Of course, many would dribble back in over the next few years, but it would unleash a lot of bad blood and bitterness.

Re:Go with logic (and this decision shows none)

[jhutcheson]

I hate to break it to you, but the tin foil hatter in you is uninformed.. Clear Channel has a sizable investment + content deals with XM, thus they aren't really losing much in the scheme of things. Advertising is what it is (media buys haven't really changed a whole lot) and Arbitron ratings are perpetually bs anyway. Clear Channel is effectively realizing revenue from XM that it would have not gotten otherwise, so it is merely an addition. Provided that the value of their 8.3 million shares has increased since obtaining them - that will also be more cash for the kitty.

The info below via Wikipedia:

Clear Channel programming agreement

As part of terrestrial radio giant Clear Channel Communications' early investment into XM in 1998, the companies entered into agreements which provided for certain programming and director designation arrangements as long as Clear Channel retained the full amount of its original investment in XM. One consequence of this was that XM had (and still has) exclusive programming rights to all Clear Channel content, including popular national shows like Glenn Beck and Coast to Coast AM. In June 2003, Clear Channel entered into a forward sales agreement relating to its ownership of XM. During the third quarter of 2005, Clear Channel and XM arbitrated the impact of this agreement on the Operational Assistance Agreement and the Director Designation Agreement. The Arbitration Panel decided that the Operational Assistance Agreement would remain in effect, including Clear Channel's right to receive a revenue share of commercial advertising on programming it provides to XM, but declined to enforce the Director Designation Agreement. Per the original agreement, Clear Channel has the right to program 409.6 kbit/s of XM bandwidth, including forcing XM to include commercial advertising. The current plans for this bandwidth will include up to 5 music channels including: XM11 Nashville!, XM21 KISS, XM22 Mix, XM24 Sunny, and the relaunch of WSIX on XM161 plus the existing talk channel programming (XM165 Talk Radio, XM152 Extreme XM, XM142 Fox Sports Radio, and XM173 WLW). Plans to introduce new regional based talk channels, which would have featured a local 2-3 minute newscast for each area of the country, were cancelled. The music channel advertising is expected to be limited to the 5-6 minute per hour maximum that was in place prior to XM taking its music channels commercial-free in 2004.

Seen as a blow to XM's 100% commercial-free music channel status, XM Executive Vice President of Programming Eric Logan released a programming announcement to XM subscribers on the company's website that reiterated XM's commitment to commercial-free music while noting that XM still had the most commercial-free music and that more commercial-free music channels will be added in the near future to ensure that XM will still have more commercial-free music than competitor Sirius Satellite Radio. On April 17, 2006, XM launched US Country (XM17), Flight 26 (XM26), XM Hitlist (XM30) and Escape (XM78) to provide commercial free music in the formats of the Clear Channel programmed music channels which were going to begin airing commercials. In response, Sirius has displayed that they are the only satellite radio provider that is 100% commercial free with music. Both XM and Sirius air commercials on their news, talk, and sports channels.

The Clear Channel forward sales agreement with Bear, Stearns & Co. Inc is set to expire in 2008, at which time Clear Channel is expected to deliver to Bear Stearns over 8.3 million shares in XM -- which is their original investment -- however Clear Channel withholds the right to settle with cash. If Clear Channel settles with shares, then it would be expected at that time that Clear Channels' Operational Assistance Agreement with XM would terminate, along with any and all programming provided by Clear Channel.

Re:Go with logic

[iocat]

Actually, part of that 1997 license also said neither service could prevent someone from making a device that received BOTH services. But no one has done it yet. I for one would welcome a new XM/Sirius/FM/AM one-device overlord. Until then... I'll stick with XM.