The top two rivals in the satellite radio industry have agreed on a merger as an attempt to lower costs. XM Satellite Radio Holdings Inc. and Sirius Satellite Radio hope to merge as equals with shareholders of each company owning approximately 50 percent of the combined entity. They would collectively decide on a new company name and where the company would be based.
Currently, a Federal Communications Commission provision specifically forbids the companies to combined making the proposed plan seem more like a far-fetched idea. The companies would need to demonstrate that the merger would be in public interest, giving consumers more choices and affordable prices. They would also have to meet antitrust approval from the Department of Justice. The two companies plan to argue that they currently compete with traditional radio, advancing digital audio sources as well as each other.
XM and Sirius are working on developing a universal receiver that could receive signals from both companies instead of just one company's signal. This would allow them to eliminate exclusive programming and listeners could enjoy programs offered by each company. The impact on subscription prices is unknown at the time. The merge could either bring down the cost of providing service or it could grant increased pricing power as the only U.S. satellite radio provider.
It is unclear if the FCC will change their regulations regarding the consolidation of two satellite radio companies. The National Association of Broadcasters, a group that represents radio companies released a statement urging federal regulators to block the deal.
This article reminds me of the consolidation of the radio industry following the Telecommunications Act of 1996. The act made it possible for a few large group owners to dominate the industry. I would predict that if XM and Sirius were to merge into one satellite radio provider, the consolidation would have similar effects on the sound of satellite radio as the consolidation that occur through out the radio industry.
http://www.komotv.com/news/tech/5934831.html
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3 comments:
Thank you for blogging about this topic. I heard about the proposed deal this morning and thought I'd write about it. Your post says it all. I think this may lower prices in the short term, as both companies will try to show that "nothing has changed" and that monopoly laws are not broken, but in the long run it can only have negative effects on consumers. Both pricing and programming will suffer.
This is an excellent post, and well thought out. I completely agree with you, and Livia's reply. I don't believe that in "the end" it will be beneficial to listeners. As potentially being the only satellite company to provide programming in the US, for certain prices will increase, and formatting will become a nightmare! I can only imagine what they have in mind in regards to formatting, but I don't see this as an opportunity to "expand" by any sense of the word.
I think the consolidation of the two satellite radio industy would play out much like the cable companies. They would eliminate competition and raise rates dramatically over time. In addition the bottom line would be cut drastically and many people would lose their jobs. I cringe when I hear of consolidations because they never seem to be a good thing for consumers.
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