Justice Department Approves XM-Sirius Satellite Radio Merger

The Department Of Justice (DOJ) clears XM-SIRIUS Satellite Radio Merger: With this monumental hurdle overcome, the two major satellite radio companies, XM and SIRIUS now turn to the Federal Communications Commission (FCC) for final approval. According to the joint news release by XM-SIRIUS many organizations and individuals have publicly endorsed their merger. XM and SIRIUS clam consumers, former FCC chairmen, Members of Congress, public interest groups, diversity organizations, retail and auto companies and religious leaders and more have all voiced their support. "They have all championed the lower prices and increased programming choices that the merger will afford consumers".

Will a Satellite Radio Monopoly Drive Prices Higher?
If there are concerns that the merging of these two companies will create a satellite radio monopoly there are far greater concerns. XM and SIRIUS may be major competitors when it comes to satellite radio but they also compete with free radio sources, streaming customized music channels on the web, itunes, in addition to streaming videos on You Tube. In the race to satisfy consumers, many of these are no cost or low cost alternatives. But in its infancy while copyright issues are being negotiated by legal teams at major recording companies, not all these music alternatives have complete music catalogs. If anything, a successful merger of XM and SIRIUS should help minimize administrative, technological and operating costs so that these savings can be passed onto consumers or continue to be invested in developing high quality niche programming.

Developing a Satellite Radio Market is Expensive
Anytime a company is first to market with an innovation, they have to make a long term investment. XM and SIRIUS radio have had to invest in both technology and on-air talent. That can get expensive. Especially when you are talking about investments in media superstars like Howard Stern and Oprah Winfrey. Who is going to pay for something they already get free? So in order for both XM and SIRIUS to grow their markets, one of their key benefits has been to offer narrow-casting. Satellite radio offers a myriad of specific channels of music and talk programming. Offering a breadth of programming is costly. Merging the two companies allows them to continue to offer high quality programming broadcasting in clear, digital sound.

Economies of Scale
Nothing drives prices down then when masses of people begin adopting technology and satellite radio is no exception. Offering one technology or standard receiver to receive XM and SIRIUS satellite radio allows the merged company to cut down on development costs. If XM and SIRIUS combine their resources then they have a chance to provide satellite radio to the masses at less expensive prices. The more subscribers, the greater economies of scale.

More Choices
Once the merger of XM and SIRIUS are approved, the joint company has plans to roll-out "a la carte" options for consumers to select 50 channels for $6.99/month or $14.99/month. These customized plans would require a new satellie radio which would probably cost around $50-$200. Bundled packages will start at $9.99/month with packages of "music", "family" and "news,sport,talk" radio channels grouped together. Customers who already have satellite radios will not require new radios to received these bundled offerings. Currently SIRIUS offers 130 channels at $12.95/month. XM radio offers 170 digital channels for the same price. The proposed merger of XM and SIRIUS would offer a package of all 300 non premium channels for $16.99/month.

The FCC Must Act Quickly
I had a chance to try XM Satellite radio when digital radio was included as part of my shared car service, Zipcar. I was surprised at how awesome satellite radio is once you have tried it. The reception is excellent. Plus the variety of music and entertainment options is such good quality. It is the same difference between broadcast and cable TV. With more and more people commuting, satellite radio has tremendous appeal when stuck in a car for hours on end. But as technologies move ahead and legal issues become resolved, it will not be long before on demand or custom radio stations will become easily affordable on IPODs or Blackberries. In order for XM and SIRIUS radio to continue to be profitable, they must attain swift FCC approval to gain a mass subscriber base to continue to offer high quality programming.

Source:
"Merger of SIRIUS and XM Attracts Support from Far and Wide". xmradio.com