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."'"

since Satellite radio has so few consumers

"We just simply found that the evidence didn't indicate that it would harm consumers."
...since Satellite radio has so few consumers...

Re:

They're close to about 20M listeners between them.

For those of you complaining about why pay for a service you get for free, I'd ask the same thing about free air TV vs. cable. In general, I don't like broadcast TV, and I don't like free-air radio. Cable has a large number of options, and so does satellite. I like being able to jump from a channel of strictly 80s music to a channel with traffic and weather for the area I'm in to music my 5 year old will want to listen to and then switch over to some elec

Took them long enough...

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:Took them long enough...

The reason that this took so long to approve is that it is illegal on its face. The agreement that opened up the satellite spectrum for XM and Sirius specified unambiguously that no merger would be tolerated.

I agree that a year is a long time for the Bush so-called administration to make a ruling that contradicts a law. Usually that's done before morning tea.

Re:Took them long enough...

XM & Sirius asked the justice department for approval over a year ago. Why on earth did it take them so long to approve this?

The FCC had to make sure the offer was Sirius.

I support this

I'm a Sirius subscriber, and in almost all cases, I find these kind of mergers to be bad for people like myself. But in this case, I think that the cost of market confusion, particularly with buying new cars, is more a burden than any perceived loss of choice. I find it intensely annoying to have one car Sirius capable, and the other XM capable, and now way of having both without $600 in after-market installation.

That said, if xSiriusM decides to raise prices or add back advertising or what have you, people will desert them in droves. Terrestrial radio is only worse because they have made a very strong effort to make satellite radio better. If they move towards a ClearChannel-esque service model, they'll be out of business in a year. Particularly ads. God help them if they put in ads.

Long overdue

I say this as an early XM subscriber from 2001, but these companies will have a hard time breaking even, even as a single company. There is too much competition from free radio and mp3 players now. hd-radio is the digital version of free radio and that will push satellite radio further into the niche category. HD-radio will effectively triple the number of public stations available in most urban areas. Even clear channel will have a hard time making all the new commercial radio channels bland. I realized the XM's real problem as I was driving in my car, listening to xm radio, not through an xm radio, but through its internet feed through my broadband card. Today, I can almost get my pick of thousands of stations today (many with better sound quality than XM) while I'm mobile. Think about what's going to happen when Verizon and AT&T get the new frequencies they just purchased in the recent auction [slashdot.org]. I know that most folks despise free commercial radio (outside of the public stations), and for people in remote areas, XM/Sirius might be your only option, but rest assured, things will get better. And this merger will help. For one, they might be able to reduce the overlapping stations and use the bandwidth for more alternatives (like bringing back edgier stations like ngoma and xm-unsigned and music lab).

Maybe Sirius' audio offerings wont suck now...

We had Sirius service for a year. My wife tends toward country, and she hated every station they had. Now, I am not into country but even I could tell that all of the country stations on Sirius were for older crowds and did not compare to what I hear on the various radio stations.

Meanwhile, I used to listen mainly to their christian rock station. They then drop it and about a dozen other stations. They encouraged me to listen to Spirit. That'd be like dropping the headbanger's station and telling a metalhead to listen to the Elvis All Day station. Okay, so both may technically fall under rock. But they're worlds apart. Siriusly, you might as well just try towing a 20ft trailer with a Prius.

Stupid, they totally don't get their own markets.

***

Maybe this merger will improve the quality of their programming.

Merger is not complete.

From XM's web site: "The pending merger is still subject to approval of the Federal Communications Commission."

Why I think this is a good idea

I know not everyone will agree with me on this, and they are entitled to stick it to me after they read this post. That being said, I have been an XM subscriber for a year now and am excited about this.

Radio needs Satellite radio! For the last decade, I have been striving to find quality programming on radio that wasn't lacking the polished professionalism of most college radio stations and at the same time wasn't the over-researched, payola driven, target market homogenization of your typical Clear Channel station. That was found in Satellite radio for me.

The key differences with satellite radio and AM/FM these days is this. AM/FM is losing listeners every day. Advertising is down 15% in the last few years and listeners are turning off the AM/FM radio for other mediums. Instead of taking a chance with formats like in years past, stations owned by large corporations and disappointed shareholders instead become more conservative and try to be less distinguishable than before to attract the largest number of listeners. What happens is a large number of stations in a given market end up with eerily familiar formats, with little to no variance in station programming.

Satellite radio has taken a different approach. With such a comparatively smaller audience nationwide when compared to there traditional counterparts, Satellite radio will do anything to attract listeners, and that has been through offering dozens of niche stations with specific programming. It's fantastic sitting in my car and listening to Deep House music in one station, NCAA March Madness another, and obscure underground classic from another. It's what FM used to be 13-40 years ago in my opinion.

In short, FM is playing conservative to keep what listeners they have and are losing daily, while Satellite is taking chances to draw whatever listeners they can get.

Why is this merger good? Both stations are fiscally hurting, and a quality medium like Satellite radio needs to be strengthened against not only AM/FM/HD radio, but iPods/Podcasting, and streaming radio online.

compatibility?

Anybody know if the two systems can be made compatible without swapping receivers? I have XM built in to my car. I'd hate to have it stop working after the merger.

Neither company has

ever reported a quarterly profit. The two companies have always lost money. If they don't merge it is likely at least one of them is going to go bankrupt and the other would probably just take over some of their previous customers anyway. I don't see why everyone is bitching, them merging is a good for both them and their customers.

Also I don't know this for sure, but since Sirius would be the buyer here wouldn't they make sure their combined network is compatible with both existing Sirius and XM hardware? Changing that would only piss their customers off, so those of you who already have Sirius or XM shouldn't need to buy new stuff.

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

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

Re:

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 facto

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

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

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

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?

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.

But, increasingly, the traditional radio stations are all owned by Clear Channel and the satellite stations are the only ones offering content like that. If you're looking for continuous, commercial free, specialized radio channels with national coverage .... is there really any competition left after this merger?

If the choice is down to the Clear-Channel payola and commercial dominated crap, or the now merged Sirius/XM broadcast on satellite, that hardly represents consumer choice. This is like a choice between the "old radio model" and the "new subscription model", with the option of playing your own CDs and MP3s thrown in.

Then again, I've long stopped expecting US regulators to actually do anything which preserves choice for consumers -- they just do what the corporations want.

A market war between two satellite providers would only drive prices up and deteriorate service quality.

And how will creating a new monopoly in the market not eventually drive up prices and deteriorate service quality -- I simply don't believe it's evey played out differntly. They're not in competition with the traditional radio stations, so among people looking for an alternative, there would now be exactly one game in town. Once there is one game in town (*cough* Comcast *cough*) they can abuse you all they like.

Satellite was the only alternative to the traditional model. I must say, I just don't get how this is ultimately better for consumers.

Cheers

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

They have to compete with every free radio station in the country, internet radio and other forms of music/entertainment content.

Comparing this with TV is the short-bus way of looking at it. TV you can only get from Cable (usually only one player in town), Satellite, or OTA (which isn't eveywhere either). I don't know of many places that you can't get at least 10 radio statios + internet.

It's a "new" format and it has to compete with other audio broadcast formats out there. Look at the bigger picture.

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

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

Clearly, you've never driven anywhere in the western United States, particularly the mountain west. I've taken many a road trip through west Texas or around the four corners area where I can go hours without a single radio station. Sometimes, I'll get one static-filled religious or country station, hit the seek button, and watch the dial go all the way around and end up right back at the same station.

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. Radio is not like TV, it's not something that people will generally listen to in their spare time. It's usually something people listen to when there are no other entertainment options, such as when they're driving.

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

The competition isnt between "satellite radio companies". The competition is between "what people listen to in their car".

Your choices are:
1. Pay service like XM / Sirius
2. "Free" radio (and all the commercials that come with it)
3. iPods / MP3s / podCasts

They are all in direct competition for people's ears as they commute.

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

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?

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?

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?

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:Stupid

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.