Justice Dept. Approves XM/Sirius Merger

Ripit writes "Just yesterday the Justice Department approved the merger of Sirius Satellite Radio and XM Radio, a Sirius takeover to the tune of $5 billion. The transaction was approved without conditions, despite opposition from consumer groups and an intense lobbying campaign by the land-based radio industry. 'In explaining the decision, Justice officials said the options beyond satellite radio -- digital recordings, high-definition radio, Web radio -- mean that XM and Sirius could merge without diminishing competition. "There are other alternatives out there," Assistant Attorney General Thomas O. Barnett said in a conference call. "We just simply found that the evidence didn't indicate that it would harm consumers."'"

Comments

Umm... what other Satellite Radio is there?

[RaigetheFury]

Am I missing something? This is like Comcast and Time Warner merging. There wouldn't BE any more competition.

Re:Umm... what other Satellite Radio is there?

[Brian Gordon]

Yeah, you'll have one company offering satellite radio. And thousands of companies offering AM/FM radio, internet streaming radio...

Re:Umm... what other Satellite Radio is there?

[Iphtashu Fitz]

You're missing a lot.

XM/Sirius is a pay service. They offer music, news, talk shows, etc.

AM/FM radio is free. They offer music, news, talk shows, etc.

iPods can be used to listen to music, news (podcasts, etc), talk shows, etc. (also for free)

New emerging technologies like wimax may offer alternative ways of streaming music, news, talk shows, etc.

This is basically what the DoJ ultimately decided. There are enough alternatives for content delivery that a merger of these two wouldn't create a monopoly in the economic sense. True they may be the only company offering services by satellite but they certainly couldn't jack up the prices without customers leaving for perfectly viable alternatives like terrestrial radio, iPods, etc.

Re:Umm... what other Satellite Radio is there?

[JBMcB]

It's closer to DirecTV and Dish merging. Neither has a whole lot of subscribers, and their real competition is cable and free TV, along with the internet, etc...

Satellite radio's real competition is terrestrial radio (analog and HD) along with MP3 players. That's who they have to compete with, if people don't want to pay for their service they don't have to, there are other places to go.

Re:Umm... what other Satellite Radio is there?

[mea37]

Satelite TV doesn't meet the needs of every TV viewer; it's still considered to be in competition with cable, even though some viewers (those in some apartments; or located such that they can't get a good view of the sky in the right direction) can't use it.

The government's role in approving mergers is not designed to ensure that you personally will have multiple choices of product to meet your individual needs; it's to promote competition in the market as a whole. Internet streaming radio is a valid factor in the market.

Regardless, there are options other than sat radio for use in your car. Such as AM, FM and high-def; and arguably tape, CD, and iPod. When someone looks at a presented list of options, picks the one that doesn't apply to him or her and complains about that one... that just sounds like someone wanting to complain.

Re:Umm... what other Satellite Radio is there?

[Hatta]

I don't know of many places that you can't get at least 10 radio statios + internet.

Try almost anyplace between the Mississippi river and California.

Re:Umm... what other Satellite Radio is there?

[gnick]

For example, you can get the same signal driving across the country? The service from satellite is different. You're right - The service is different. But, the competition isn't over who'll provide your satellite radio service. It's over who'll entertain your ears. I can drive across the country while listening to continuous content from my mp3 player. Of course the service is different. But, if I'm listening to mp3s, I'm not listening to satellite. The same goes for the, again different, AM/FM service.

XM is not the biggest competitor for Sirius (nor vice versa). CD/MP3 players and AM/FM broadcasts are - and HD radio is marketing aggressively to try to maintain that market segment. The driver for lowering satellite radio prices and improving content is persuading people that it's worthwhile to adopt satellite radio and pay the subscription fees. A market war between two satellite providers would only drive prices up and deteriorate service quality.

Re:Umm... what other Satellite Radio is there?

[Phat_Tony]

I agree with all the replies that state the same thing the summary said- there's so much competition to using satellite radio at all that you don't need competition within satellite radio. But I also wanted to point out your example's pretty bad- how many markets are there where Time Warner and Comcast actually compete? I'm not aware of any. They're two companies that mostly own a whole bunch of geographically distinct local cable monopolies. They'd actually be an example of two companies where there isn't much economic basis for restricting a merger between them, because they aren't in competition with each other. Or at least they aren't competing for customers in many markets. They do compete to acquire other cable companies and such.

Examples of their competition are satellite TV, broadcast TV, and to a lesser extent Netflix, Blockbuster, Youtube, Tivo, iTunes, Bittorrent, movie theaters, etc. Because they aren't geographically constrained, Sirius and XM are actually in much greater competition than your example of Time Warner/Comcast, who barely compete at all.

Re:Umm... what other Satellite Radio is there?

[pnewhook]

The issue has little to do with what competition remains within satellite radio, but whether there remains competition. Satellite radio competes with broadcast radio and a number of other formats, so the merger does not remove competition, but makes the combined company more efficient and less likely to lose money.

Both XM and Sirius are bleeding money right now and that can't last forever. If the the industry allowed them both to go under that would counterproductive to helping competition.

Re:Umm... what other Satellite Radio is there?

[pnewhook]

Let's try something different; based on your assumption that sat. radio is competing with iPods, terristrial radio and CDs, should we now allow all FM stations to merge into one? After all, they are competing with sat. radio, iPods, etc.

It's all got to do with percentage market share. If you look at broadcast and satellite market as a whole, if both XM and Sirius had say 40% or ever 20% of that market each, then no they wouldn't be permitted to merge. Letting XM and Sirius merge at this point does not reduce choice as the percentage market share is too tiny.

Re:Umm... what other Satellite Radio is there?

[jagilbertvt]

You mean Clear Channel doesn't own them all already?

Re:Umm... what other Satellite Radio is there?

[petik]

A market war between two satellite providers would only drive prices up and deteriorate service quality. How do you figure? "Market war", or competition, generally drives prices down, not up.

Re:Umm... what other Satellite Radio is there?

[BBandCMKRNL]

Having said that, even though I make trips like this at least twice a year, I still don't have satellite radio, because I don't see the need. Even with my cheap factory installed car stereo with no auxiliary jacks, I can burn a few CDs from my MP3 collection to fill the hours when there are no decent radio stations. Maybe if I did that sort of traveling on a monthly basis or something. Regardless, I have a hard time seeing the appeal of paying a monthly fee for radio unless I'm a traveling salesman or something. In our case, that "something" is the following: I live in a city of over 1.5 million people but there is no jazz radio station of any type. This makes the price of satellite radio worth it to my wife. In my case, the fact that I can listen to several rock channels without any annoying commercials makes it worth it to me.

My only complaint is that both satellite services went for quantity in the quantity vs. quality tradeoff and as a result their audio is better than FM but not CD quality. I'm hoping that if the merger goes through and digital FM takes off, they will merge the duplicate satellite channels into CD quality channels.

Re:Umm... what other Satellite Radio is there?

[michrech]

Are you really this stupid, or are you trolling? I can't tell.

I (and millions of others just like me) listen to satellite radio all the time (I listen to it all day in my office -- listening to it right now via an XM Radio gadget in Vista). I take a 4.5 hour trip to Omaha, NE at *least* once a month, and other shorter (but still hour plus trips) between those. Hell, I even listen to the Sirius stations while I'm at home through my DishNetwork service (MAN I wish they had XM instead of DirecTV -- the Sirius programming *sucks* compared to XM in my opinion) hooked up to my HT setup.

I *hate* commercial radio. I *loath* listening to commercials for seemingly half of an hour. I hate it so much that I barely watch TV live (I record virtually everything). XM has been *awesome* for me. I am not alone.

Just because *YOU* don't subscribe to it, and thusly think it's unneeded, does not make it so. It *is* a needed service. I absolutely *refuse* to listen to normal radio after having had my XM service for several years now.

As it is right now, if the merged company decides to adopt the Sirius broadcast hardware, I'll be very upset. It does not sound as nice as XM's does (Sirius just doesn't provide as much bandwidth to their music channels as XM does and this is *especially* noticeable on their internet stream).

Ah, the vast population of US truckers. I forget how large of a group they are. Are you kidding me, of course there is going to be a niche demographic that has to benefit from something like this, but at large this is an unneeded service. My previous statement however I agree is with too broad of a brush and I retract it.

Re:Umm... what other Satellite Radio is there?

[martinQblank]

"...I still don't have satellite radio, because I don't see the need."

And that's exactly why XM and Sirius have to merge. The market isn't currently there to support both companies. I AM an XM subscriber (and shareholder) and I'd rather see them merge than go away.

Re:Umm... what other Satellite Radio is there?

[DaveV1.0]

Where are the alternative, metal, electronica, and bluegrass AM/FM stations?

So, go start one and make money off it.... if you can. How big is the market for bluegrass or metal in your area? Small market means small earnings through advertising.

Here in Tampa, we have WMNF 88.5, which plays all kinds of crap. But, they don't make any money and follow the public radio model. Begging drives to get money to pay for the programs. Oh, and did I mention they alienate half their potential audience by being somewhere left of Air America?

Your real complaint is that most of the people in your area don't have your tastes in music and so music you like doesn't get played on the radio because it wouldn't earn any money.

Re:Umm... what other Satellite Radio is there?

[DaveV1.0]

There are various attributes -- e.g. higher sound quality, access to the same channels from anywhere -- of satellite radio which are not found in terrestrial broadcasts. You may not consider these attributes important, but others may not find terrestrial radio to be even a suitable substitute, much less "interchangeable".

Apparently, you don't have satellite radio if you think the sound quality is higher.
Access to the same channels from anywhere is only useful if you travel a great deal, which most of the population does not.

You mention "others may not find terrestrial radio to be even a suitable substitute". How many of them are there? How much of the population do they make up? Having been a trucker, I know they are a strong market for this kind of service, as are people who live in extremely rural locations. But, for most other people who travel for a living, satellite radio does not have much of a draw because one can rent a car with it, and one generally can't use it inside many, if not most, locations. So, please, enlighten me as to the size and make up of this group of "others".

Re:Umm... what other Satellite Radio is there?

[RightSaidFred99]

Yet more devolvement into obscure issues to justify government regulation of a company. Let me get this straight, you have the gall to sit there and whine about obscure stuff like Clear Channel quality and being able to listen to same thing driving across country and then claim the government should step in "for the customers"?

Quite simply - I don't subscribe to your socialist leanings. You would have the government regulate something at the drop of a hat ("but I have to change channels, or I can't listen to the song I want") for "consumer choice". I would say leave it alone until it becomes an unreasonable burden on people, and by 'unreasonable' I don't mean "whaaa, I don't get a consistent listening experience across country".

You are one of the new breed of closet socialists who think "consumer choice" is more important automatically no matter how trivial the issue than anything else. You remind me of the poeple who think societal rights are more important than individual rights. They're not. If there's one good thing about Republicans, it's that they don't buy the bullshit you're selling.

Re:Umm... what other Satellite Radio is there?

[DaveV1.0]

In my experience there are usually only a few really clear stations in any given area, and even they tend to get overrun by static during the occasional storm. I suppose that might be avoided if you happen to live within sight of the transmission tower,at least for FM, but most people don't.

I have satellite radio. I lose signal, not static but complete signal loss, in heavy tree coverage, in parking garages, in areas with tall buildings, going up and down curving mountain roads, etc. And, the sound quality can be iffy, especially if it is a talk program, such as the news.

The reason that it matters is simple. Even if one does not like any or all of the choices, one still has a choice. Therefore, there is no monopoly. Your hypothetical group has a choice. Their preference for satellite over terrestrial radio does not constitute a monopoly if there is only one satellite radio provider especially when satellite radio is vastly smaller than terrestrial radio.

Like it or not, satellite radio is a niche market and even if there is only one company serving that niche market, that company does not have a monopoly because of the existence of the greater market to which the niche belongs.

Took them long enough...

[Iphtashu Fitz]

XM & Sirius asked the justice department for approval over a year ago. Why on earth did it take them so long to approve this? Here are a few other mergers that the DoJ approved in under a year: Exxon/Mobil, AT&T/Bellsouth, Chevron/Texaco, Sprint/Nextel, Whirlpool/Maytag, etc.

Of course a number of these other huge mergers didn't require FCC approval as well. The XM/Sirius merger now as to wait for FCC approval, so it's going to end up being a lot longer before this is all said and done. It absolutely disgusts me that XM/Sirius is taking so much longer than the consolidation of the oil industry, telephone industry, etc. This will end up being the longest approval process in history. What justifies taking so long when mergers involving bigger economic concerns like oil took hardly any time in comparison?

Re:Stupid

[Iphtashu Fitz]

It won't become worthless. It'll likely become more valuable. If the merger completes then in the short term you'll likely see content being shared between the two services. Right now the various sports franchises have pitted the two satellite providers against each other for lucrative exclusive deals. You can hear NFL on Sirius only, MLB on XM only, etc. When the merger completes you'll likely be able to hear baseball on Sirius and football on XM. Other exclusive content, like Oprah on XM, Howard Stern on Sirius, etc. will also likely be made on the other service. So the bottom line is that you'll probably have more content available to you.

Eventually you'll probably see receivers that can receive both services, but that will depend a lot on how the companies decide to merge their two technologies. That likely won't happen for years though, and during all that time they have to keep supporting their existing customers.

Re:Maybe Sirius' audio offerings wont suck now...

[Anonymous Coward]

My wife tends toward country... I used to listen mainly to their christian rock station Maybe you should just stop listening to shitty music?

Re:I support this

[TheHorse13]

I'm not sure what you listen to on Sirius but their main draw, the Howard Stern Show, started advertising 2 days into their broadcast. You can bet that since it is tolerated now, they will slowly creep in more across their line-up. I just purchased a new car that came with XM free for a month. I turned on the comedy channel and what did I find? Yep. Ads. You can be sure that all of us will be screwed (again) just like when cable TV promised commercial free viewing and movies right from the silver screen (how many places do movies go now BEFORE cable? 7 or 8?). Oh and don't forget about those service fee increases that always happen after companies merge (and after they say it won't happen). Now, I'm not saying that we won't get a better array of program choices, but I am saying that we are naive if we think that we're not going to eventually pay $20 a month for Xm/Sirius which will include plenty of advertising on their channels.