A Poor Idea: XM & Sirius Merge

I wrote about this one about a month ago, and apparently the deal itself has been in the works since November.

From Yahoo:

WASHINGTON and NEW YORK, Feb. 19 /PRNewswire-FirstCall/ -- XM Satellite Radio and SIRIUS Satellite Radio today announced that they have entered into a definitive agreement, under which the companies will be combined in a tax-free, all-stock merger of equals with a combined enterprise value of approximately $13 billion, which includes net debt of approximately $1.6 billion.

The companies are bragging "Greater Programming and Content Choices", "Accelerated Technological Innovation", and "Enhanced Financial Performance". They're only serious about one of those, and you can guess which one that is. Besides the only obvious programming benefit of having all the major sports licenses with one company now (and the Howard Stern / Opie & Anthony shock jocks, if that's how you roll), there will be no better, more diverse programming. Duplicate format stations will get the axe across the board, and without the competition, you can bet there won't be any innovating sounds ready to replace them. This new XM/Sirius monster won't be having the sort of internal competition that makes stations really great, like you would have in a relatively free market like the FM airwaves. The same tenets apply to the technology -- without the other company around to up the ante, satellite radio now has zero initiative to improve it's current product.

Like I said before, this is only a hiccup on the way to the next generation of radio technologies, in much the same way DirecTV was for television. We'll be looking back on this merger as the "beginning of the end" of satellite radio, years from now, when Internet radio and hovering skateboards rule the landscape.

Link via [Yahoo!]

XM / Sirius merger coming?

from Stereogum:

Speculation of a Satellite Radio merger is nothing new, but an increasing number of pundits are weighing in with scenarios of how the possible transaction would play out, and whether it'll benefit anyone (aside from Mel Karmazin).

With only about 13 million subscribers between the two major providers, XM and Sirius, satellite radio isn't reaching nearly the amount of ear-holes that radio big-wigs thought they would be at this juncture. A lot of folks I've spoken to see the service as a high-priced stop-gap between the old technology (the FM dial) and the new one coming down the pike (wireless internet radio). In fact, satellite radio could be jumping the shark faster than satellite television did while bridging between old basic cable and services like Verizon's fiber-optic TV.

The fact that these companies are considering a merger less than a decade after both services were launched is a clear indicator that subscription-based audio content, no matter how it's delivered, will not work as long as there are free alternatives. A merger between XM and Sirius will mean more content for listeners, but at what price? Will fees go up, or will the new Frankenstein service insert ads to create what will effectively be a CD-quality radio dial with more stations?

Why were radio executives ever under the impression that people will pay for radio? Listenership on FM and AM has been in steady decline for years -- so why would people want more of the same (even at a much higher quality) and want to pay good money for it? It's a wonder that both companies still exist here in 2007.