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XM/Sirius: Keep Them Lean, Hungry And Separate

The Listener is no more, but I have this piece on the satellite radio merger on today's Post op-ed page...

Why has it taken federal regulators 17 months to decide whether XM and Sirius should be allowed to merge? Because both of these statements are true: Even with a merger of the two pay radio companies, satellite radio is a dead man walking; and with or without a merger, satellite radio is poised to be among the most important content providers in a confusing new media landscape.

Even before getting to basic questions about the fast-changing nature of media, the quandary over whether to marry New York-based Sirius and Washington-based XM was a tough one for the Federal Communications Commission, whose chairman, Kevin Martin, this week announced his support for the merger. In 1997, the FCC gave its blessing to the two satellite radio companies on the condition that they remain separate and competing operations. With AM and FM broadcasters struggling to stay afloat in increasingly rough waters, the prospect of two of their most threatening competitors merging has sparked a battle of lobbying titans.

But all the legal and political wrangling at the FCC and earlier at the Justice Department boils down to one essential question: Do XM and Sirius compete merely in the narrow world of radio programming that is beamed up to a satellite and then sent out to be captured by listeners in their cars and homes, or are the satellite radio providers just one more source of news and entertainment on a new media menu in which broadcasters, bloggers, books, newspapers, magazines and movie studios all scramble for consumers' attention, regardless of means of transmission?

If you see XM and Sirius strictly as satellite radio companies, the idea of the government allowing them to halt their competition and become one more monopoly is hard to stomach. Consumers know just how much to trust the companies' promises that prices will stay low and programming will remain diverse. The main reason that these companies want to get together is that they are losing money separately; only by pooling resources and cutting costs can they hope to make big profits. That inevitably means fewer choices and lower quality for listeners.

But consider this alternative perspective: Although neither government nor industry knew it when the feds licensed XM and Sirius, satellite radio is an interim technology, hardly likely to survive far into the next decade. Once Internet radio is available simply and cheaply in Americans' cars, offering an infinite universe of audio programming, why would consumers want to buy a separate radio, antenna and wiring to pull in XM-Sirius? The enormous infrastructure the two companies have built over the past decade would become obsolete almost overnight.

Except for the programming. The satellite providers, separately or together, would move their wares onto the Web and fight it out with the sounds and stories offered by Clear Channel, Pandora, CBS, NPR, BBC, local radio stations and news organizations around the globe.

What exactly is so special about XM and Sirius that the government should grant them a competitive advantage in that marketplace? Should the government strengthen XM and Sirius for that inevitable battle of the content providers? Or should it tell them that because they were created to provide programming via satellite, the FCC remains obliged to assure continued competition in that technology until the day it dies?

Satellite was made to provide deeper and broader choice. And it has. But throughout its short life, XM and Sirius programming has edged ever closer in style and content to fare found on commercial AM and FM. I went back to the original promises XM and Sirius made and found fabulous lists of programs in many languages, with half a dozen genres of classical music, pop sounds from every corner of the planet, live radio dramas, high-end scientific and academic debate, and all manner of other esoteric and minority fare.

Then reality struck. Millions of Americans proved to be dissatisfied enough with AM and FM radio to pay $13 a month for 150 channels of music, news and talk. But what did they listen to on their new toy? The top pop hits, country, oldies, hip-hop, Howard Stern, baseball, news headlines, and traffic and weather reports.

XM and Sirius have maintained many services for smaller audiences -- channels serving up jazz, techno, Broadway tunes, bluegrass, presidential politics and Canadian news -- but despite having more than 20 million subscribers between them, the companies are in a bind: Their future depends on their ability to compete against other media big boys for Americans' ears. The history of media teaches us that big businesses in that position reach for mass-appeal content.

Is it really in the public interest for the FCC to foster yet another media flight from quality and diversity? The right move -- both to protect consumers and to position the satellite companies for the intense competition in the next phase of the great media shakeout -- is to force XM and Sirius to enter the new world not fat and happy but lean and hungry.

Marc Fisher, a Metro columnist for The Post, is the author of "Something in the Air: Radio, Rock, and the Revolution That Shaped a Generation."

By Marc Fisher |  June 21, 2008; 8:59 AM ET
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Comments

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Perhaps you are right Marc in that both XM and Sirius have not been disciplined enough in cutting extravagant expenses. For a service that is supposed to cater to more sophisticated tastes does it really need to compete with free radio on so many fronts? Perhaps the expenses of running a satellite hardware format are so expensive they have no choice but to hire people like Oprah Winfrey (as if we don't have enough exposure to her already). But if this is not the case than it's a no-brainer to let them merge. If the country can't support two satellite radio stations than perhaps it can support one. I can't hear new and old Jazz-Fusion ANYWHERE else but Satellite Radio and it would be an artistic tragedy in this country if we don't save this valuable media source.

Posted by: Kevin | June 21, 2008 11:44 AM

The author needs to learn more about the types of service satellite radio offers. I continue to pay for and use XM even though I now drive my XM-equipped car about once each week. The streaming audio version of XM, over the Internet, is that important to me. Satellite radio is also Internet radio, in fact it is a great source for a wide variety of ad-free audio programming, streaming through my Internet connection right now.

Posted by: thw2006 | June 21, 2008 12:28 PM

I oppose the XM-SIRI merger for the following reasons, which can be summarized as organized crime restraint of trade (antitrust 10 yr + $10 million fine per violation), and cultural anti-Americanism (sabotaging XM70 jazz channel). Also, organized crime conspiracy in financial markets manipulation (CNBC radio channel).
1. Antitrust count 1: Antitrust "product fixing". XM and its co-conspirator DirectTV (DTV) have taken a fine all-jazz radio channel (XM70, DTV0850) and diluted it with blues and with huge amounts of unrelated talk (jazz history), plus excessive amounts of relevant talk (jazz music appreciation). Numerous complaints seem only to have had the effect of worsening the situation.
2. Antitrust count 2: Antitrust restraint of trade. Instead of the lengthy polluting talk segments, XM and its co-conspirator DirectTV (DTV) could have inserted brief jazz sales segments. However, jazz CD and download sales result in royalties to performers, whereas jazz broacasts do not. This is in concert with Organized Crime domination of live music in large segments of the U.S. market (including DC the metro area in particular). They want to keep jazz musicians poor so that O.C. can more easily manipulate and exploit them.

Requests to readers, Washpost, and public officials: (A) Please try to influence FCC to oppose the merger.
(B) Please try to get the FTC or DoJ to review the Antitrust aspects I have pointed out. Until now, the only antitrust aspects which have been under review were the tying (lack of a la carte options), pricing, and equipment licensing issues. Product fixing and failure to provide sales pitches for CDs (items 1 and 2 above) have not been addressed. The Organized Crime motivation for the business methods has not been addressed.

((Personal note: I sympathize with jazz musicians because I work a large part of the year not just for low wages but for zero wages, as a slave (18 USC Sec. 1589 et seq.) (independent contractor loophole, applies even to nonexempt clerical employees such as myself) for some of the largest corporations and law firms.))
PS: The CNBC radio channel on XM is also a major offender (no code of good practice) which helps O.C. and terrorists (short sellers and abusive commodity speculators like Osama bin Ladin and CIA).
- - - - - -

Posted by: Rtetpl | June 21, 2008 1:01 PM

Silly people against the merger... Satellite radio isn't a necessity - and two sinking companies should be able to try to stay afloat. If you don't like the prices, then don't subscribe. The market will speak if XM/Sirius outrageously raise the prices. I wonder why all these people weren't as concerned with the merger of oil companies? I guess jazz stations are more important.

Posted by: sam in va | June 21, 2008 2:47 PM

I'm against mergers that create monopolies like whats occurred in the recording industry, the oil industry, the media, the airline industry, etc to name a few. But the right palms were paid and greased on Capital Hill to see those mergers were all expedited quickly. Rather than slowing those mergers down, politicians green-lit those mergers faster than you can say "5 dollar a gallon gasoline."

The XM Sirius merger dilemma has little to do with a monopoly being created. Its about a monopoly that already exists and continues to pay Capital Hill to keep competition away from terrestrial radio.

Posted by: p w | June 21, 2008 3:00 PM

Hey Rtetpl,

Come to sirius where they keep the jazz and the blues separate. Besides Howard Stern, Pure Jazz 72 is the station i listen the most to. I hope they do merge so i can hear baseball and I also hope they improve the hip hop stations. I would to hear more true school and golden age hip hop instead of the same 10 songs and all the dumb nonsense they play now. I hope in the merger we get some sort of true school channel.

Posted by: Kevin | June 21, 2008 3:21 PM

I like XM Radio a lot. Really. But since they got Bob Dylan as a DJ, they play him too much.
I wonder if there is payola involved -- or playing favoritism so that Dylan gets more royalties.
At this point in my life, I am sick of him. And there is no way to automatically switch when Dylan (or the Band, or the Traveling Wilburys, or Dylan's son, or the Byrds playing Dylan songs) come on.

I've written to XM radio about that, and they deny the problem, but won't release statistics on this issue. Maybe the FCC can require it a statistical analysis. I've seen times when 3 of my top 20 music stations on XM have Dylan playing.

Posted by: Pete from NYC | June 21, 2008 5:09 PM

You say they are "dead meat" and should be lean and mean. Gotcha ya. Might be raw but it ain't fresh.

Posted by: dunnage | June 21, 2008 6:44 PM

I am against this for so many reasons, but mainly, because XM - despite its expenditures - has thought more about what is appropriate for radio.

For example, the NFL approached XM first for a radio contract (similar to their MLB contract). XM turned the NFL down because they felt football was more visual than baseball (a sport with a long history of radio broadcast).

Both, though, have worked a little too hard to bring marquis names. While Howard Stern is a DJ, I don't know that he's worth the huge amount Sirius paid him. And sure, XM has Oprah...but she's a talk show host - her persona translates to radio. But Martha Stewart on Sirius? You need to *see* what Martha is doing.

If the merger goes through, both need to realize that some of us pay for radio because we don't want what's on Clear Channel - we want the focus they can (and do) generally provide. I don't care about flashy names - I want satellite radio that gives me the focus I'm paying for. I'm afraid that the merger won't do that.

As for the comment about Internet radio vs. Satellite Radio....um - Internet radio is still based on traditional, terrestrial radio stations. The only good thing it does is bring international radio to you, which I do admit is quite cool. But since I live in Western Wisconsin where cell phone reception is crap, I don't think I'm giving up my satellite radio in favor of in-car Internet radio anytime soon.

Posted by: Anonymous | June 21, 2008 9:12 PM

Opposition to the proposed merger of Sirus and XM is just plain silly. How little scutiny did the merger of Mobil and Exxon get? How little scrutiny did similar mergers get?

This proposed merger has been obstructed by people who simply have their own selfish reasons to squelch the merger. The regular radio broadcasters have for years failed to provide programming that anybody wants to hear. When Satellite radio came along and provided real choices, regular radio almost lost its mind!

In any case if the merger were to go through and the combined company did something like raise it's prices,, listeners could simply stop paying for the programming. Pretty simple marketplace economics, really. Nobody makes any of us subscribe. My car already has a very nice radio and CD player. I could certainly do without Satellite radio if they lost my loyalty. So why continue to force these two companies to operate at a loss?

Why not let them try to be successful? Because regular radio wants them to fail? There is simply no real reason why satellite radio can't operate as a combined entity...what if Siruis had never emerged? There would only be XM. Would the regulators pitch a fit in that case? Would they be required to give away free channels to minorities to satisfy some ludicrous requirement?

FCC is just held hostage by regular radio. The Department of Justice approved the proposed merger. Why is the FCC being so impossible?

You don't think it has anything to do with the presence of howard Stern, do you? The FCC has a long history of an advesarial relationship with Stern.

Get over it, FCC. Let XM and Sirius thrive. Approve the merger without conditions and onerous stipulations. Enough is enough, already.

Posted by: Sangreal | June 21, 2008 10:14 PM

Marc,

It's very rare that as a consumer, I support a merger between two competing companies. However, in this case, it makes sense. For one, there is no way I can get XM & Sirius on the same radio. What if I wanted both the NFL and MLB on the radio? (The former need has been made more acute by the last however many painful years of Larry Michael - I haven't listened to a complete Redskins game on the radio since he started.) You mentioned techno and bluegrass as 'niche' genres. If XM had Armand Van Buren, and Sirius had Allison Krauss, why should I not be able to get both?

Would not the combination of two bluegrass audiences strengthen the desire to keep one very good channel of it on the combined 300 channels worth of bandwidth that they would have? (And how is that working out on WAMU-HD3 these days?)

I too, miss the world music and african music channels on XM - though they still offer them online. XM used to carry an Indian-themed station, and they discovered that most subcontinental transplants to the US listened to......the same things the rest of us do. I don't think that demonstrates a bias against diversity.

Posted by: Joe in SS | June 21, 2008 10:17 PM

Consider this: there may very well be fewer choices if XM and SIRI merge, but there will be a lot fewer if they both go out of business because they can't turn a profit.

Posted by: bridges12932 | June 23, 2008 8:51 AM

"Consumers know just how much to trust the companies' promises that prices will stay low and programming will remain diverse."

Firstly, the FCC has said they would force XM/Sirius to keep their prices at the same rate for a minimum of 3 years. Plus XM and Sirius have already laid their plans for cheaper a la carte channels and bundle pricing.

"The main reason that these companies want to get together is that they are losing money separately; only by pooling resources and cutting costs can they hope to make big profits. That inevitably means fewer choices and lower quality for listeners."

Does that make sense? They'll have more money so they're going to hoard it all and spend less on programming? No channels will be lost, XM's 70's channel will merge will Sirius's 70's channel and so on but those channels are identical anyways and it makes sense. But now Sirius listeners will have access to all of XM's channels they never had before. And there's alot of exclusive channels that was before only on one service... NFL, Baseball, Nascar, Howard Stern, Oprah, Martha Stewart.

And say they do cut the programming and there are fewer options. Guess what, satellite radio is a subscription service and if the programming sucks, people won't pay and they will go out of business. But atleast only Sirius and XM will be to blame. The government and the NAB shouldn't be the one's putting them out of business. They should be allowed the chance to succeed.

Posted by: eQUIV | June 26, 2008 6:45 PM

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