The FCC announced it is “seeking comment ” on the proposed merger between the only two satellite radio companies in existence. Am I the only one who wonders they are even bothering?
Based on recent decisions like the one in which the FTC contested the Whole Foods (WFMI) and Wild Oats (OATS) $560 million buyout, I cannot fathom a scenario in which the only two companies in an industry are allowed to form only one. While I feel the Whole Foods opposition is nonsensical, the fact there is opposition to it is what it is. The merger between XM (XMSR) and Sirius (SIRI), valued at $4.7 billion is currently being opposed by both consumer groups and the National Association of Broadcasters and really, I cannot find anyone who favors the merger except folks and shareholders of XM and Sirius.
For a little history we only need go back to the attempted Direct TV (DTV), Echostar (DISH) merger a few years ago. There we had two companies attempting to merge to create more competition against other pay TV companies (cable) like Time Warner (TWC) and Comcast (CMCSA). . The FCC opposed and squashed it because they said the merger would eliminate competition in rural areas and the same scenario holds true in this instance. Also hurting this attempt is that we have no pay radio competition at all for the combined entity to argue they need to merge to help combat in other areas. The profitability with the two companies is not due to lack of consumer interest, it is due to moves like giving Howard Stern hundreds of millions of dollars to essentially do what he did for for a fraction of the price on free radio. Heck, if they had just waited the guy probably would have pulled an Imus soon enough and got himself tossed off the air anyway, then they could have picked him up on the cheap. The only difference now is that without the specter of the FTC coming down on him at any minute, the cache and risk is gone and so all you have is a middle aged guy swearing on the radio, it’s get boring after about 3 minutes. There is a reason he has not been in the news the last 2 years, nobody longer cares.
This attempt will be squashed and consumers will win in the long run. Short term, shareholders will get hit.
4 replies on “Sirius (SIRI) / XM (XMSR) : Dead”
What if you are wrong? Will you eat a big handful of crow?
By the way, I know plenty of people that do favor the merger that are in fact not shareholders. I have a handful of friends around me that are all smart enough to know and understand the finer details and they are all for it. (They also happen to be a mix of XM and Sirius subscribers).
I cant imagine that every single person leaving comment are shareholders and the Pro-Merger camp is up by 36 points.
http://siriusbuzz.com/overwhelming-consumer-support-for-merger-continues.php
crow? Hardly,
Fed. regulators have become very anti monopoly recently. by allowing this merger, they create one. if they do allow it, it will be with such harsh restrictions, the companies will not want to go along with it.
stick a fork in it
How about this dandy
http://biz.yahoo.com/seekingalpha/070612/38048_id.html?.v=1
Where you question the move to give Howard 500 million when a 8th grader, who understands basic return on investment, knows that signing Howard was the absolute smartest thing they could have done? You are SA certified so, I am sure you know that was the smartest 500 million they could have ever spent. He is worth 500 million for the shear amount of free branding and advertising that comes along with every time his name is mentioned or something wacky that happens on his show?
(What happened to XM’s 5 million sub lead they had on Sirius?)
Between the number of new subscribers and the advertising he sells on his channels he has more than paid for himself. Why else would have have qualified for his bonuses?
For the record I am anti-merger, as I know Sirius is going to wind up beating XM and in the end there will be only one company remaining anyway.
actually it was the roll out into Ford models that helped them catch up. XM was first to be “free” in cars with GM and only when SIRI was available did they close the gap