Tuesday, March 06, 2007

Is an XM-Sirius Merger Good for Consumers?

By Chris Haak


Recently, XM Radio and Sirus – the only two satellite radio operators in the US – announced their plans to merge. There is a specific rule the FCC’s books prohibiting any single company from owning the only two satellite radio broadcast licenses. FCC Chairman Kevin Martin has said that this merger will face a “high hurdle” to determine whether the proposed transaction is in the “public interest.”

Overall, it will end up as a bad deal for consumers.

The only people I could see this merger being good for consumers are for those who are already subscribing to both XM and Sirius, and those who subscribe to one or the other, and are dissatisfied with the quantity of content they are receiving from their current service.

You can bet that if this merger passes, consumers will not be given 50% more programming for the same $12.95 per month price. Instead, we'll get 50% more programming for $19.95. Management will then argue that they are actually saving us money, because previously, subscribing to both services would have cost $25.90 per month, and now they're "only" charging us $19.95. I forget which executive has already made a similar argument, but it was something very close to this logic.

I am a longtime XM subscriber (since 2003), and I'm very happy with the service. But with 200 channels and two half-hour commutes per day, I really don't need more than the 200+ channels that XM already has. I listen to about five or six different channels (mostly talk radio) and only very rarely venture outside of my "comfort zone" into unknown channels. I just don't know what else is out there and if it's worth my time to explore new content. That problem would get worse with 300 channels, not better.

1 comment:

mkaresh said...

Good to see you writing for Autosavant. I spoke with Brendan a few days ago, great guy.