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Sirius and XM merger? April 3, 2007

Posted by Stacey Swift in blogs, Merger.
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Through CNN.com I came across a blog addressing the possible merger of Serius and XM radio. Recently, The Carmel Group, an outside research and consulting firm, published a paper stating that he possible merger would be anti-competitive and harmful to consumers. If the merger did take place consumers would be able to access both MLB and NFL programming from a single subscription, however they would be subject to a monopoly of satellite radio. This situation is very similar to that of the attempted merging of satellite TV companies DirecTV and EchoStar in 2002. The merger was prevented by the Federal Communications Commission because it would create a monopoly. Sirius CEO Mel Karmazin claims that the merged company would still face competition against free radio, MP3 players, and internet radio. Are these forms of listening to music, news, and sports really on the same level? I think satellite radio is its own product and is not in competition with these other products and services.

Many consumers who posted to the blog are in favor of the merger because currently many people pay $12.95 a month to each company in order to receive the benefits of both services (mainly sports fanatics). If Serius and XM merged they would be able to get MLB and NFL games for around $15 a month. However, I do not think Serius and XM should merge. The competition between the two is essential to get the best product possible. It forces them to seek out the best music that thier consumers want. If the companies merged they would not have any close competition and would lose incentive to continue improving thier product. This is still a fairly new product and concept and I think competition is necessary to bring it to its best possible form. Do you think XM and Serius should merge? Is satellite radio in direct competition with ipods and free radio?

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Comments»

1. Kira - April 4, 2007

I agree with Stacy- they should not merge, at least not yet anyway. I do not think you can even compare satellite radio with MP3 players, free radio, or internet radio. The quality of satellite radio is way above the other products. Although the $15 sounds like a good price compared to what consumers are paying currently, if the merger holds off then competition may force the price even lower than $15.

Not only may the price drop but, I agree with Stacy that the companies will be more inclined to continue innovating. Competition is every companies drive to improve their quality. Competition not only controls prices and increases product quality, but also customer service and technology innovation.

2. jz - April 6, 2007

Ok, so what are the organizational implications for such a merger? Cultural implications of the two organizations? Can such a merger of equals (as it is being billed) truly succeed in such an unprofitable environment? Will leadership get in the way of itself? Can two rivals really successfully partner up? How can your mortal enemy one day be your trusted brother the next?

Is this a last ditch attempt to stave off the impending demise of this technology and business model? Supposing regulatory approval is granted will the proposed financial economic improvement be enough?

Recently we have seen Chrysler in the news with its impending divorce from Daimler. This too was billed as a merger of equals. Ten years later we see a significant imbalance in the equality of the relationship and billions in red ink. The relationship with Auburn Hills and Berlin has been anything but equitable. Can we see any parallels with XM & Sirius?

3. Jordi - April 13, 2007

I subscribe to Sirius. I have recently found that the 3-4 channels I listen ot most often are grating on me. Not enough diversity in format. I like more independent radio becuase the personality of the DJ comes through. The niche stations on Sirius (and on XM, they are very similar) just feel too thought out. Too obsessed with sub-genre labels and marketing niches.

A merger would seem to make it worse. On the other hand, if it is clear that both will fail as businesses, does the government allow the merger in the interest of not allowing a new industry to collapse?

4. B Myers - April 1, 2008

I have a years subscription with Sirius and would like to have a channel that is on XM. How can I get channel 78 Excape (Beautiful Music) before the merge?


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