Dogs And Cats Living Together?
The only two subscription radio services in the US have agreed to merge, hoping that the plethora of platforms for content will convince antitrust regulators to ignore the deal. Sirius and XM will combine their offerings as well as their operations, hoping to save as much as $7 billion:
Satellite radio operators Sirius and XM are expected to announce their long-awaited merger today, according to a source familiar with the deal.The two sides were locked in negotiations over the weekend trying to hammer out a final agreement with an eye toward going public with the merger today in Washington, D.C., where XM is based, this source said. ...
Combining Sirius and XM would result in a single satellite radio operator with more than 12 million total subscribers. A deal would also marry Sirius content, such as Howard Stern, Frank Sinatra and Nascar with XM's Oprah Winfrey, Bob Dylan and Major League Baseball.
More important, analysts widely predict that a deal would also save the two companies nearly $7 billion annually.
Can the two companies possibly spend $7 billion a year between them? That number seems very high. Twelve million subscribers at $10 per month -- what I pay for XM -- comes to $1.44 billion in revenue. The New York Post may need to recheck its figures.
I wonder how they will get past the regulators, though. The Post reported that the two companies feel they had a short window to announce the merger in order to make it through the 15-month closing process. It sounds as if they believe the Bush administration's Justice Department will take a more laissez-faire attitude towards the deal than whatever follows after the 2008 election. That could be true, but it will be hard to ignore that a market with two providers suddenly only has one. While that may be all right with its subscribers as long as the rates stay low, it will make it tougher for content providers to crack the lineup and put them at a stark disadvantage in negotiating their compensation.
For those who have worked with the two companies in the past, compensation is already a problem. Taking the market away will not improve it.
On the other hand, I'm inclined to like the merger. Not only will I get more content, but now I can have the pleasure of turning off Howard Stern again. I missed that when he left the airwaves to go to Sirius, and his presence there helped inform my decision to choose XM. Now I can truly boycott him again.
Posted by Ed Morrissey on February 19, 2007 3:36 PM | Comments (0) | TrackBacks (0)
