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XM And SIRIUS Radio Merging
lenny6998 writes to tell us Yahoo! News is reporting that XM and Sirius Radio, the only two major players in the relatively new market of subscription satellite radio have announced a merger. "The two companies said in a statement that Mel Karmazin, the CEO of Sirius, would become chief executive of the new company while Gary Parsons, the chairman of XM, would remain in that role."
Well, it didn't work so well when one terrestrial company tried to contain the three of them. WNEW had them all at once, and O&A were treated as the little stepbrothers who were slapped with gag orders and so on regarding talking about Howard. I foresee tension in the Force.
On another note, how will this work hardware-wise? Can they in fact offer one united channel selection over any current hardware? Will they continue to offer two separate "branded" offerings that each go to the proprietary radios until new hardware can be rolled out?
I wish there was a choice that said "Factually Wrong -1" when I mod.
Sorry, I use it ALL THE FREAKING TIME. Ask any trucker if they will part with their Satellite radio.
I drive close to 300 miles a week in the DFW area and local radio stations just don't have enough content to keep me intrested. Except for a few talk shows that I listen to, I need a sat radio to keep sane.
Yes, I do have an ipod loaded to the gills with music, but to be frank, without Satellite, I wouldn't have any NEW content to keep me awake.
The thing everyone forgets is that monopoly isn't the problem: it's the abuse of monopoly to unfairly control a market.
XM and Sirius have so far both struggled for customers for several reasons, not the least of which being problems of customer awareness. Many people simply don't know - and won't learn without extensive research - which network would be better for them (in terms of content, quality and price). People are used to having one radio "network", expecting competitors to just be different channels. The idea of two separate networks with non-interoperable hardware just isn't what people want.
The question is how this new hybrid company (I love the AT&T joke...) will shape its new business model: if no other satellite companies emerge, will they offer channels 'for rent' to other content providers? Will they continue to own all channels? Etc.
"Stumble before you crawl"
If you look at the combined content of the separate companies, there is a lot of duplication of effort. Each provider has some exclusive content, but the majority of content is duplicated. There is also 2x the infrastructure, 2x the personnel, 2x the billing systems, etc. Well, it may not be exactly 2x but you get the idea. By combining the two, you combine the customer base yet cut the overall operational budget. Thus the bottom line is improved. There could also conceivably be some added advantages of freeing up bandwidth. Or they could sell of the radio spectrum too.
Nothing will be decided probably until at least years end. Even if they get approval, it will take some time to also figure out the technical details as to who's equipment to go with, who gets laid off, etc. Actual savings probably won't be seen for several years, but if indeed they do merge, the cost of competition gets a lot cheaper in a hurry.
Its clear that XM and Sirius were in competition for a limited market. The iPod in the end was what brought these two together. XM and Sirius had a small window before cars started installing adapters for iPods. Since almost everyone who listens to music has a iPod, it meant that the benefits of satellite radio where lost when you could just plug in your iPod.
Whereas the two radio networks were counting on subscriptions continuing to increase each year for the next 4 years, in reality, they started leveling off this year. And now they have a business model based on a subscription base neither is likely to meet.
As a result, I think we'll see one of two things out of the new company. Either a substantial rate increase or a substantial content decrease. At any rate, its unlikely that the new company will have the variety of content that we see on both today.