Is the XM-Sirius Merger Good for Consumers?

It's been rumored for almost 2 years now that XM and Sirius would merge. When they finally came out and announced it in the February 17, 2007, press release, SIRIUS and XM to Combine in $13 Billion Merger of Equals, I thought that the merge was going to take place at the end of 2007. According to the press release, XM and Sirius merging will "create a stronger platform for future innovation within the audio entertainment industry and will provide significant benefits to all constituencies." Also, because the merge would increase their advertising revenue and reduce their expenses they would be able to offer consumers affordable subscription prices. Honestly, we thought about it for maybe a minute when deciding on which satellite radio to buy. As with most Americans, I want what I want now and I don't want to wait. So we looked at what XM offered and what Sirius offered and made our decision. XM promised that we would still be able to use the same equipment, enjoy the same programming and our subscription costs will stay the same after the merger.

Comments filed with the FCC Office of General Counsel, Transaction Team by The Media Institute stated that they would be for the merger as long as the FCC relaxed its restrictions on broadcast radio owners so that they would be able to "at least hold their own - against a satellite monolith." I don't really understand how that would help anything. Making the choice between satellite radio and broadcast radio is like choosing between local television and satellite or cable television.

Americans For Prosperity have filed comments with the FCC saying that the FCC shouldn't give credence to the claims that this merger would create a monopoly with market power. How can it not create a monopoly? I am aware of only two companies that offer satellite radio programming, XM and Sirius. Although it is true that they are not competing for consumers as they once did, if they are the only company offering satellite service, after getting the FCC's approval to merge, eventually they'll be able to charge pretty much what they want.

According to the article, XM-Sirius merger approved by DOJ, on CNN Money, most people don't switch satellite radio providers once they've subscribed to one. We've been with XM for almost a year and haven't thought about changing to Sirius, but if XM was to raise their prices or I have a horrible experience with their customer service, I would want to change to Sirius in a heartbeat. In a few months or so we may look at updating our equipment and selling our old equipment on eBay. At that time we would be able to weigh our options again by looking at how many channels we would get and what their equipment had to offer. Switching satellite radio providers wouldn't be a big deal unless of course there's only one to choose from.

If I understand it correctly, based on the XM-Sirius Joint Opposition FCC Filing, if we want Sirius programming, as well as our XM programming, we'll have to pay an additional $4.00 a month. However, for just 25 cents each we can pick and choose which Sirius programs we would like to have. While the pricing sounds good to me as a consumer, I'm still leery of this potential satellite giant being able to dictate what I have to pay for satellite radio programming because they would not have any competition. Then again, satellite radio is considered a luxury and not a necessity.

I really have to say I'm torn in how to respond to this merger. On one hand we'll have more programming, but on the other hand, I'll no longer have a choice when purchasing satellite radio programming. This could be a bad thing for broadcast radio owners, which I'm sure, will trickle down the line and be a bad thing for me when it eventually hits my pocket book. I am worried about getting my money's worth for satellite radio programming. Even though they've outlined what looks like a decent plan, we all know eventually it can and probably will change. Regardless of what happens, at least we won't be forced to buy new equipment.