DOJ Approves Sirius-XM Merger: Why It Doesn't Matter

The Department of Justice's Antitrust division has approved the merger of Sirius and XM. The NAB, which has vigorously fought the merger was predictably indignant. NAB EVP Dennis Wharton fumed:

We are astonished that the Justice Department would propose granting a monopoly to two companies that systematically broke FCC rules for more than a decade.

It isn't clear why the NAB feels that the DOJ should be so concerned about their violations when the FCC didn't seem too upset, but when one is tilting at windmills, any stick will do. The truth is that the merger really doesn't matter. Both Sirius and XM are good examples of bad radio. If their products were local radio stations in a small market, they would be well down the rankers. With few exceptions the formats are repetitious, with jocks in serious need of coaching, and marketing that is non-existent to dreadful.

If the merger goes through, we'll have one mediocre sounding satellite radio company instead of two. Without the competition, the formats will have even less incentive to "innovate" (as if what one hears on XM or Sirius is the result of innovation).

Subscription churn is already increasing and new subscription rates are slowing. We are probably close to a subscription plateau. Our research suggests that there are few people on the sidelines who are ready to sign up once there's a single satellite radio company, even at current prices. When the merged company tries to raise subscription rates, the plateau will quickly turn into a plummet.

So let them merge. Let's stop letting satellite radio distract us from the real challenge we face, creating compelling radio that people want to listen to.

Comments

[Jim]

Richard,

Thank you for your reply, but you're still essentially wrong. I'll grant you the quality of jocks are no better on satellite (but not worse), but at least they don't ramble on with bad comedy for ten minute stretches. And the best "jock", is on satellite, Howard Stern. Plus your mentioning that the most successful stations on satellite are most like traditional radio, is faulty, as on satellite there are no commercials, making you want to press the change button.

Good day again.

[Richard]

Jim, I'm glad to hear that you are pleased with satellite radio. I would hate to think that you're paying $12.95 a month for something you dislike. On the other hand, with 170+ channels, I'd be surprised if you couldn't find something worth listening to.

Our point is that the quality of jocks, positioning, and other non-music elements are weak. If any of these channels tried to compete in a medium to large US market, they would fail.

Keep in mind that satellite ratings show that the majority of listeners prefer the channels most like commercial radio stations. The niche channels have practically no listeners.

[Jim]

This seems like the most ridiculous fluff article i've ever seen on the topic. Satellite radio is bad radio? i have satellite radio, and i couldn't be happier. When i am in other's cars, listening to their over air radio, i get so frustrated over the bad comedy and endless commercials, i want to scream! You can try to prop up commercial radio with fluff like this, but the general public can see through flimsy propaganda like this.

And if satellite radio were on the regular radio spectrum, somehow capable of broadcasting without commercials, i think the regular stations' ratings would be those plummeting.

Good day.