XM and Sirius to merge?

[xultar]

XM and Sirius to merge?
Posted Jan 26, 2005, 9:49 AM ET by Peter Rojas

Neither company will confirm that anything is going on, but the New York Post says that execs from XM and Sirius have been in merger talks lately. Doesn’t sound like things are too far along—it could take as long as a year before they put together a deal, and there are plenty of technical, antitrust, and FCC licensing issues that would have to be hammered out first—but given how small the overall market for satellite radio is (especially considering the infrastructure costs), some sort of merger or alliance like this might be inevitable (the big question is whether the Feds would ever allow it).

http://www.engadget.com/entry/1234000680029034/

[hector459]

1. This really breaks my heart. The right wing wins again.

I thought Sirius was our hope.

[peekaloo]

2. Can we not escape Clear Channel?

[MattNC]

4. what does Clear Channel have to do with it? n/t

[ET Awful]

6. They own a whopping 2% of XM stock, so people have blown that

out of proportion into a theory that Clear Channel owns XM.

[MattNC]

7. that was my point

and aren't they getting rid of that 2% as well?

[peekaloo]

9. I wasn't implying they owned XM.

Jebus.

A friend who works for them in Houston has told me of their plans to expand their influence in the satellite market.

Sometimes it pays not to think er type out loud. :dunce:

[cascadiance]

14. If Clear Channel were to buy more than 2% of XM...

then the market *would* notice and that would drive a lot more consumers concerned about Clear Channel's monopoly to move to Sirius as an alternative.

What we could be seeing with a merger is "part 1" of Clear Channel's aim to protect it's monopoly. If the merger goes through, then there won't be any market forces to prevent Clear Channel buying a "huge" stake in the combined company. What competition would exist after that which the customer could go to to avoid Clear Channel's influences? They then would probably try to kill Howard Stern's show after the new FCC folks try to expand their influence to satellite radio and levy big fines on Stern and other shows that also are "indecent".

Bushco then would have a media monopoly. As a Sirius subsriber, I'm deeply concerned with this potential merger. Hopefully it will die a similar death that the Echostar/DirectTV merger did in satellite TV space did.

[peekaloo]

15. Isn't Steven Hicks on the board of XM?

power play in motion.

Thank you.

[AP]

18. I think the best business plan Clear Channel could pursue is to

own an interest in satellite broadcasters, and then continue to turn regular broadcasting into the uniformly boring wasteland that it is. They could use the regular broadcasting to push top-40 and load up with advertising, and then drive everyone who wants anything different to the pay-service.

In fact, that's probably the business plan, but I bet they don't want to expose themselves to too much risk because they probably suspect that pay satellite radio doesn't have a guaranteed bright future.

An aside about the FCC: I know a lot of DU'ers have framed this whole thing as the FCC being the enemy and satellite radio being the saviour. But, to me, it's such an obviously different story.

The FCC has been the best friend of Stern and the satellite broadcasters. They are helping to create a justification for pay-radio. Besides diversity, the only other thing that pay-radio has going for it is bawdiness, or whatever you want to call it. It's the cable-TV business model. I would be extremely surprised if Sirius and XM lobbyists weren't the biggest supporters for the FCC cracking down on Stern, and I wouldn't be surprised if Stern's outrage wasn't part of a marketing plan developed months ago.

[peekaloo]

23. Does the P in AP stand for perspicacity?

;-)

[GiovanniC]

24. And Then Make Satellite Boring and Heavily Commercialized Also

Cable/Satellite TV didn't originally have advertising... food for thought.

[AP]

26. When the margins aren't what they thought they'd be, that's inevitable

In fact, like I said, I think free satellite radio is inevitable.

[cascadiance]

27. It isn't just diversity...

Sirius does give the *only* option to any American now to get Air America programming 24x7. No other broadcasting option does that (unless one tunes in through the internet). XM divides it's Air America coverage with other syndicated hosts like Alan Colmes leaves out a good chunk of Air America programming off of its spectrum. It has only one left wing talk radio channel whereas Sirius has two.

With the Fairness doctrine in the toilet, and media monopolies like Clear Channel, Sinclair, etc. increasing their control with an "absent" FCC, it is critical that avenues for alternative political viewpoints still stays open, even if it is pay radio versus advertising supported.

Part of the problem with advertising supported "free" radio is that the advertisers exert as much control as listeners do to the content. Now with the government increasingly becoming a one party system, public funded radio too is also in danger of having a differing agenda than what the listenership wants to hear. Pay radio is the only avenue now that allows people to "be the boss" of what they listen to and have capitalism work like it should. Keep it competitive.

[TreasonousBastard]

3. Yeah, well...

last year the Post was talking about Viacom buying Sirius.

All of this rumormongering is coming from the Murdoch empire, and who knows what plans he might have for his Sky-whatevers...

[MattNC]

5. hehe

there's been talk of him starting up a satellite radio service actually.

[Darknyte7]

8. When is the last time...

that either the FCC, the SEC or the Justice Department objected to ANY merger? I honestly don't recall one...

[NashVegas]

10. Direct TV + Dish

Remember that? When Murdoch first courted Direct TV, they wanted nothing to do with Newscorp and were headed to merge with Dish. Murdoch protested. Merger refused as 'anti-competitive.' Now, Murdoch owns Direct TV.

[Darknyte7]

12. okay...

I do now recall that. Even still, that example speaks for its self.

[Edgewater_Joe]

40. Dish Network Has Sirius

At least their music programming - which makes me think that a Dish/Sirius merger or purchase is more likely than an XM/Sirius merger.

But I'm glad to hear Clear Channel doesn't have a big chunk of XM. That may prompt me to get an XM subscription for the baseball coverage (I already have Sirius and love love LOVE it!) after all ...

(Oh, and when was the last time any of us believed something the POST published?!)

[benburch]

11. That would be a disaster

Air America would lose its channel for sure.

[AP]

13. I don't see how satellite radio can survive on subscriptions.

I just don't see how people would be willing to pay for something like radio.

I imagine that they'll have to make it free evenutally and will have to support it with advertising.

I also bet that cell phone companies will start competing with normal radio and with sattlite radio by broadcasting programming to combination cell-phone/radio recievers/MP3 players which will cause more pressure on the satellite broadcasters' profits.

[knitter4democracy]

16. We got it, and we love XM

We live nowhere near Air America or really any good stations. We have one decent NPR station, and that's about it. After getting XM, now we get Air America's stuff, my hubby's Cleveland Indians games, and many great channels that we're still having fun exploring. Best thing we've gotten in ages.

[AP]

19. That's sort of like Netflix being super popular in rural areas...

....where people don't want to drive miles to rent and return videos.

However, I still don't think there are gong to be enough people like you, and I think there will be a lot of competion from other sources, like iPod, for example, and from cell phone companies.

[knitter4democracy]

28. I could see that.

I mean, if we still lived in Cleveland, we probably wouldn't have gotten it.

[WilmywoodNCparalegal]

17. XM radio...

I think that satellite radio can and will survive on subscriptions if it develops niche programming with few, if any, commercials. For instance, I have XM radio and I am an avid college basketball fan. I live in the NYC metro area and, while most of the games I want to see from my conference (ACC) are televised, there are a few that are not. That's when I rely on XM radio and its new ACC channels to give me the radio telecast of those games that I can't see on TV.

This is just an example. Starting this season, XM will also have MLB games, which is great for my hubby who is a passionate Cincinnati Reds fan.

In addition, we take our XM SkyFi radio along on our NYC-to-NC trips and we enjoy not having to turn the dial all the time. We also like the fact that our music tastes (which range from top 40 all the way to new age) are well represented by the variety of stations on XM radio, which are definitely not found on regular terrestrial radio, especially in the NYC area, where it's mostly urban/hip hop (a genre I despise) and the same stale top-40, with too many commercials in between.

[AP]

20. I don't doubt that sattelite radio will be around into the future.

I just don't think they're going to find the subscriber base to keep it commercial-free and fee-based.

[crispini]

21. Ooo, how do you like the SkyFi?

I've been thinking about getting one, just not sure I want to pop the extra $$$ for a new radio AND a new subscription. But the concept of the SkyFi is sooooooooo cool. And I am a total gadget weenie.

If XM would only broadcast ALL of Randi Rhodes they'd be PERFECT.

[dhinojosa]

22. Hmm, it's like saying that you can't see how cable TV can survive?

Satellite Radio on Sirius has two liberal stations which I like. All the NFL (Sweet). They have maxim radio. They have pretty much something for everyone. Something like 4 NPRs, CNN, PRI, and tons of news. And more uninterrupted music than regular radio. (Classic, Pop, New Wave, Techno, Elvis, Country, and on, and on) So is it worth my $8/mo? hell yeah!

And when you go on that road trip in the middle of nowhere, you will definitely wish you had it.

As far as Sirius/XM Merger, BAD IDEA! Especially for Howard Stern fans, I am not one, but that would be a disaster.

[AP]

25. I can see how cable TV survives:

It's owned by HUGE entertainment corporatiosn who control 90% of everything people consume, whether it's book, magazine, movie or TV.

Furthermore, TV is, culturally-speaking, a central part of home entertainment, and it's way more satsifying in terms of the senses it stimulates.

Radio is peripheral entertainment. You consume it when you're doing something else, or when you're caught in the car. You don't organize your time arround it. It fills your time when you're really doing something else.

You'd never invite your friends over to listen to your radio. But you do invite them over to watch TV. Since people do organize their time arround the TV schedule, I can see how people are willing to pay for that entertainment.

People are conditioned to do that too. You pay to go to a movie, so why wouldn't you pay to watch a movie at home? You pay to go see a hockey game, so why not pay to watch a hockey game on TV?

I just don't think people are going to be willing to pay a regular fee to catch ACC basketball games when they don't know they are going to have a chance to listen to them. Perhaps they might convince themselves that there's just so much out there that they're just paying to fill up that inevitable gap time with a broad range of choices. But I don't think people really think like that. I think they'd just get an iPod instead.

I think people do buy HBO becuase they know they're going to stay home and watch the Sopranos (or tape it), and they know they can have parties when there's a boxing match. I think that's an important difference.

[geniph]

34. I have people come listen to my XM all the time!

I'm not kidding. People at work come back to my office to listen to my XM and ask me questions about it. When I take it on vacation with me, I've had hotel bellboys and waiters ask me questions about it and ask to listen to it. I've had a number of friends come over to the house to listen to it, or come out to my car to listen to it. I never have anyone over to watch TV. Of course, I don't watch TV, but my satellite radio is with me EVERYWHERE. You're extrapolating from your own experience and assuming it's the same for everyone. There's a lot of us who listen more actively to music than you do.

Both XM and Sirius are adding thousands of new subscribers every month.

[AP]

36. (geek)

:)

I'm definitely extrapolating from my own experience, and the experience of those around me, and think that's what any business should do.

All I'm saying is that I don't think there are enough people like you for Sirius and XM to make a profit. They're going to have to change the business model, and there will only be more competition.

I read somewhere that the their subscriber base right now is nowhere near what they need to be profitable according to their existing plan.

[geniph]

38. Guilty as charged!

(I'm a satellite radio evangelist in the extreme)

:D

[AP]

41. I should emphasize that...

...I love the idea of satellite radio (and I love my shortwave radio -- and there are times in my life when I thought listening to ship signals coming from the Mediterranean was an entertaining evening at home).

What I think is not going to work is the fee-basede model. I suspect that it will ultimately be free and will have commercials.

[yellowjacket]

44. Very good points...

I got XM for a couple of reasons. 1) I'm a gadget freak. 2) For ACC basketball. 3) To get exposure to a broader range of NEW music. In college (in Napster's heyday), I had time to listen to new music and really research the stuff. Now that I'm the real world, I don't, so I rely on channels like XMU and others to turn me on to new music. In the last month, I have purchased 4 new CDs, rather than the 4 total that I bought in 2004.

On the other hand, if they started playing commercials, I would probably cancel my subscription. If they made it free, but with commercials, I would probably listen ALOT less. I put in about 2 hours of quality time with XM per day, I'd say, and I LOVE it.

[kysrsoze]

42. I know lots of people who have XM or Sirius. It's now built into cars

XM is doing very well right now and Sirius isn't doing too bad. There is a market for it.

[AP]

43. I think there's a link above which says tha Sirius is in trouble

because it isn't getting the subscribers the expected. I think it says they're going to have to start running commercials. I don't know why XM would be doing so much better than Sirius and I suspect they're encountering similary cost-structure problems (not enough subscribers at the already too-low subscription price).

I'll repeat again: I don't see satellite radio working as a fee-based thing.

[yellowjacket]

45. Siruis is in trouble, but neither of them is profitable.

According to trade press, XM has about 3 million subscribers to Sirius' 1 million or so. They are both looking to expand their services, and many think that the new wave will be video delivery over satellite to cars, which has MAJOR potential. I think Sirius announced plans to have 1-3 channels of video content available in a couple of years. Do I want to watch TV in my car? No, but I bet alot of people do.

They are working on making deals with the automobile industry for exclusivity agreements. One mistake I think Sirius is making is striking deals with GM and other American makers. Call me crazy, but their target demographic doesn't really drive American cars. They're going after people 16-30, so they should market to makers like VW, Mazda, Nissan, Honda, etc.

[AP]

47. Tying sat radio to the purchase of a car shows their big weakness

but also their one potential great revenue generator.

If a Sirius contract is tied into the price of the car, you're going to get a lot of customers who see the extra 120 a year (or whatever) as being no big deal. They'll throw it into the loan, pay for it over 5 years, and the care manufacturer will make profit off the interest if they're financing the loan.

That's the only way I see masses of people doig this. If it's a bill you have to pay monthly or look at on every credit card statement, you're going to be asking yourself every month if it's something you really are finding value in.

But if it's part of that car loan, you'll think of it as even cheaper than that useless undercoating which you're paying for, so what the hell -- and that's if you think of it at all.

And Sirius wins by being able to count you as a set of ears when they brag to Wall St about their customer base.

The only dowside though is if the car manufacturers have to start eating the price they charge for the radio. They still have to compete with other car dealers, so, say they charge 300 dollars for a three year Sirius contract (of which Sirius gets 250 bucks), and that gets added to the price of the car.

Well, when you have to start chopping the price of the car to attract customers, you're still going to have to pay Sirius their 250 bucks, so if the customers are not seeing the value in the radio, they're going to be forcing you to chop that price down to whatever it would have been without the radio, and then the manufacturers are eating that cost of the radio -- the 250 to Sirius will be coming out of their pockets. Undercoating is one thing, because the costs are controlled by the manufacturer, and the profits all go to the manufacturer. But when you start adding third-party gadgets to the car that jack up the price, you better be sure that the customer sees the value in those gadgets, or the manufacturer is going to be paying for them.

[yellowjacket]

48. Agree with the analysis.

Just not sure if subscription costs can be rolled into a loan. I would think that Ford or whomever has better things to do than be a conduit for Siruis subscriber fees. But I agree about having to rely on car buyers to drive the subscriber base.

[Judi Lynn]

29. Update on the story:

Sirius Satellite Radio loss widens; CEO says he hasn't discussed merger

Canadian Press

January 26, 2005

NEW YORK (AP) - Sirius Satellite Radio CEO Mel Karmazin has not met with top executives of rival XM Satellite Radio Holdings to discuss a merger between the two broadcasters, Karmazin said on a conference call Wednesday after Sirius reported a wider fourth-quarter loss.

"I have not met with the chairman or CEO, so I have no idea where any of this came from," Karmazin said in response to a New York Post story that claimed Sirius and XM have started early merger discussions.

Marquis Investment Research analyst Greg Gorbatenko said in a research note that he believes the merger is unlikely because "we doubt it would pass regulatory muster."
(snip)

Karmazin also noted that Sirius, which first made a name for itself by offering commercial-free music channels, is preparing to add commercials to its talk and sports channels and emphasized that advertising will become an important revenue stream in the coming year.
(snip/...)

http://www.canada.com/national/nationalpost/news/story.html?id=1a7d0b6d-b037-45d5-b5f0-4f753d57dd0a

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

We NEED Sirius to stay in bidness!

[cascadiance]

30. Leave it to the Canuck media to help avoid the rumor mongering! n/t

[WilmywoodNCparalegal]

31. Why is sirius idolized/XM chastized?

Sirius' CEO is a big Dubya supporter (and he was described as such in a recent article on either Time or Newsweek). XM has a very small percentage of shares held by ClearChannel (something like 2% or so)...

Please, can someone explain?

[geniph]

33. There's three reasons for that

1) Clear Channel had a larger percentage of the startup costs when XM was initially launched. They've since divested all but 2%, and have NOTHING to do with XM programming, but the rumor persists that XM is somehow owned by Clear Channel.

2) XM does have more rightwing programming than Sirius, although thankfully, we have America Left now.

3) The XM fan site is WAY more overrun with rightwingers than the Sirius fan site.

I've had XM for several years now. I'm very fond of it. I don't listen to ANY talk radio, so I don't find the existence or otherwise of various talk channels to be a factor in my decision. The vilification of XM is dumb. Both services are wonderful for people who love radio without the BS attached to commercial radio, the chitchat, the overly cutesy DJs, and the stinking commercials. Driving across country with satellite radio is a world of difference from doing it with broadcast radio, and no fiddling about with CDs or MP3s, or any of that nonsense.

[Maat]

35. Sirius's Chairman is not a huge contributor to Bush's campaign.

And the CEO (the new CEO) is NOT a Bush contributor, but was a KERRY supporter (the old CEO, now just the Chairman of the Board of Directors, not in management, was a Bush supporter, but not a huge one). The incorporators of a corporation initiate a board of directors, and then that board is elected annually thereafter. That board oversees the top management, which includes the Chief Executive Officer, or CEO. The Bush supporter used to be both the CEO and the Chairman. Now, he is only the Chairman (heading the board of directors).

The new CEO, a Kerry supporter, is a friend of Howard's. That is good news. He has been very successful in the past.

Moreover, it does not matter that Clear Channel only owns 2%. It only counts if they are a 'majority shareholder,' and I'm sure they are. The actual percentage is irrevelant; it is whether or not the particular shareholder is a mover/shaker within the corp.

And, it makes me happy that not one dime of my money is going to Clear Channel.

That is why I am a Sirius subscriber.

[yellowjacket]

46. EXACTLY what I was thinking.

I don't get this. Sirius has 2 liberal channels to XM's 1. Big difference. I will be laughing my brains out when Sirius users are listening to commercials in a few months. HA!

[420inTN]

32. billboard has a similar story

http://billboardradiomonitor.com/radiomonitor/news/business/digital/article_display.jsp?vnu_content_id=1000777229

[njdemocrat106]

37. I hope this doesn't happen

It seems like we lose more choices every day. I'm definitely against monopolizing satellite radio.

[in_cog_ni_to]

39. If this turns out to be true....I WILL BE MAD AS HELL.

I bought a "Lieftime" subscription to Sirius because of Air America and it was the cheapest most ecomomical way to go. I want my money back. Can I get a refund if this happens? I didn't subscribe to listen to RW Clear Channel networks. I'll want a refund. :grr: Damn. The repukes are EVERYWHERE! I hate it.