Why hasn’t the XM-Sirius merger been approved yet?
- January 4th, 2008
- 6 Comments
What happened to the XM-Sirius merger?
Announced last February, the merger appears to have hit a snag. We sat through all of December with little hints here and there—sources say an announcement will be made later today, sources say the FCC is just crossing T’s and dotting I’s—but now we’re left wondering what’s going on.
Some attribute the delay to the merger’s complexity. Others contend that the Department of Justice and the Federal Communications Commission, both of whose approval is required for the merger to go through, are facing resistance from some of its staffers who oppose the merger. There’s also the continued lobbying by terrestrial radio, primarily in the form of the NAB and its silly ads, that may influencing the regulatory bodies.
For the record, so long as Opie and Anthony aren’t kicked off the air, I say merge ‘em. As a person living in he year 2008, I that whole “it’ll be a satellite radio monopoly” doesn’t really fly. You have an iPod. Use it.
buckwheat (Who am I?)
10 months ago
yea but the i-pod doesn’t broadcast on satellites does it now….
czman (Who am I?)
9 months ago
Thats sort of dumb - is it so important that your music comes from a satelite?
Hgfrdddrd (Who am I?)
10 months ago
beeep veep
John (Who am I?)
10 months ago
I say deny the merger, just let XM go bankrupt, and then SIRIUS will be a monopoly and then everyones happy.
howard-blows (Who am I?)
10 months ago
is the previous commenter (John) completely retarded? if anyone is going bankrupt, it’s sirius due to paying Howard half a billion dollars
XM GOING BANKRUPT (Who am I?)
10 months ago
John is absolutely right. If you take a look at XM’s balance sheet, you will see that they are running a higher and higher risk of bankruptcy with each passing quarter. The problem stems from their very high SAC (subscriber acquisition costs) coupled with stagnating subscriber, and ultimately, revenue, growth. Each passing quarter, the rift seems to be getting larger. It is depleting XM of much-needed operating capital. With the credit crunch of late, XM may find it difficult to secure financing when their piggy bank runs out, which will leave them scrambling to pay of their bills. Sirius has had a much better growth rate for at least the past 3 quarters…whether Howard haters like it or not. This really comes down to a management issue, not a product issue.
Based on the logic that XM is significantly at-risk for going under, which would leave Sirius all alone in the satellite radio market and not obligated to offer a-la-carte pricing to consumers, the DOJ and FCC should approve the merger to guarantee a-la-carte pricing and a robust radio entertainment platform for consumers. There is also a chance that both companies could go under, which, assuming no other entity were to buy out either tattered company, might leave many American consumers and auto retailers with useless radios installed in their vehicles. Additionally, failure of either or both companies could result in a loss of royalty revenue…and we all know that starving artists need to get paid.
Interestingly enough, the stock prices of XM and Sirius generally tend to move in parallel as opposed to anti-parallel (i.e. Intel & AMD). When one company reports good news, both of their stocks tend to rise. It seems that these two companies are not engaging each other as competitors in the market. These two companies appear (and have for a while) to be an oligopoly. I suspect that whether or not the merger is approved, XM and Sirius will continue to collaborate in order to redefine the consumer’s radio entertainment experience and safeguard their very survival in the entertainment market.
For the record, I do not use either of these companies’ services as I am quite content with my MP3s.