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A Satellite Radio Merger: the Good, the Bad, the Ugly

Opinion

By Corey Deitz, About.com

Feb 21 2007
When I heard the news about a merger deal between XM and SIRIUS Satellite Radio, the first thing I thought was, "Hot Damn - this will be good!". The second thing I thought was, "Damn - this will be bad."

Yes, at the moment, it’s both.

The Good

The good news is if these two services join forces, they’ll stop the bleeding, as in red ink, and begin to turn a profit.

A merger, they promise, will give me better choices - something called "a la carte" choices. Although this hasn’t been fully explained, I have a feeling it will be more like what cable TV does: offer me various packages which provide the programming I’m more interested in.

After all, why should I have to pay for dozens of sports channels that I don’t listen to when I can choose channels featuring things like Armenian folk music or racing sound effects or whatever their programmers will dream up next.

Yes, more choice empowers me. But, then there’s the downside.

The Bad

One Satellite Radio service will mean less competition. I pay $12.95 a month now. What will it be once they merge and what safeguards will be in place to keep my cost affordable? None that I can see unless regulatory approval comes with price guidelines or ceilings.

And what about that hardware I purchased? A couple of years ago when it first hit the market, I paid about $350 bucks for a portable XM MyFi receiver. Now what? Will the new SIRIU-X - or whatever they wind up calling it - make my investment obsolete?

Depending on how the engineers decide to address this, millions of subscribers might potentially be on the wrong side of the hardware issue. I emailed both services to ask about this and did not receive any answers. I guess they don’t even know yet how this will be resolved - and if they do, they don't want to tell me.

Of course, there's always the possibility a combined service would continue feeding both sets of satellites currently in orbit for several years after any merger to accommodate the hardware infrastructure already in place. Then, at some point, migrate subscribers to newer equipment. That would make the most sense to me.

All I know is: I don’t want to be penalized by this merger for my early loyalty and expenditure. That will not sit well with me. How about you?

Another negative which potentially affects all of us are the jobs that will be lost at both services if they consolidate. Duplicate channels will have to be weeded out.

Hopefully, the new service will pick the stronger of each competing channel. But, the truth is mistakes will be made and good programmers will be cast out. For instance, if you enjoy one of the decades channels on either service (‘60s, ‘70s, ‘80s, etc.), you may eventually be forced to listen to the programming of the other service’s offering instead of the one you’ve come to like.

The Ugly

There is a little irony in all this which might translate into some ugly sparks. If a merger happens, Howard Stern and Opie & Anthony will not only be employed by the same company (once again) but will have to compete head-to-head against one other. Of course, since there are no ratings involved (a least not any that would be released to the general public), we would never really know which show bested the other.

But, that cat fight would still be fun to follow.

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