The New York Times reports that the nation's two satellite radio companies would merge. (Personal disclosure: I'm an XM subscriber and miss my XM144 NASCAR channel, now jumped ship to Sirius)
What does this mean in a democratic system? First and foremost, the Federal Communications Commission has something to say about this deal. The FCC, when Michael Powell was chair, made some public statements about their interest in regulating the content of satellite radio. Powell's comments were on the heels of the infamous Janet Jackson exposure at the Super Bowl, of course, and now that time has passed and Powell has moved on his unique brand of puritanism has gone away.
But the FCC would still like to be empowered in satellite radio, and their ability to broker or dismantle the deal might be the way to do it. I predict the fight will be a long one.
It's not a long bridge to content, either. The FCC's main interest is in monopoly control, and they have a point. The equivalent would be Coke and Pepsi trying to merge, as they are the two dominant powers in the market. In fact, it's worse in the case of XM-Sirius, since they are the ONLY two content providers in satellite radio. A 100% market share awaits the combined company.
If the FCC does approve the satellite radio monopoly, then their allowance may take the same form that the feds created for television airwaves: treating it as a distributable utility, subject to all regulation government sees fit. That could mean limiting choice of channels or content, or both.
Part of the reason for satellite radio's recent success has been those who want uncensored content. XM's Opie & Anthony/Ron & Fez shows and Sirius' Howard Stern/Bubba TLS have been magnets to both services (though Major League Baseball for XM and the National Football League for Sirius have likely drawn the most subscribers) for people who want content they cannot get on terrestrial radio. If the FCC steps in, it may effectively squash any content difference between terrestrial and satellite radio, effectively numbing the market value of satellite.
If the merger does not go through, though, another problem arises. Sirius' debt management is awful, having borrowed big to secure the NFL, NASCAR, and Stern contracts. Sirius' stock price hovers below $5. XM, with more subscribers and a softer debt load, has stock price around $14 but it's still likely not enough to sustain a long-term profit. The merger could, through cost-cutting and economies of scale, make the joint venture profitable and thus viable over the long term. Without a merger, one or both of the companies might fold within the next few years.
Subscribe to:
Post Comments (Atom)
1 comment:
Yes, this is a serious problem for all those invlovled. It can only lead to nothing good when it comes to monoplies. There is a reason as to why they government set up regulations, just for things like this. It happened in the early years of the 20th century. But anyways, I think what you have said gives this story justice, and people should be really aware of this type of problem...
Post a Comment