Loading...
Symbols:
Authors:

Sirius / XM Merger: No Surrender

by: Stan Muse May 09, 2008 | about stocks: SIRI    

Stan Muse

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

The Sirius/XM Satellite Radio Merger (SIRI, XMSR) has been under DOJ and now under FCC review for 335 days with no real end in sight.  For both stockholders and subscribers this is reminiscent of the Iran hostage crisis, which lasted 444 days. One only need review the comments posted on recent articles or listen to Jim Cramer to see that most everyone has lost patience with our government on this issue, especially with the FCC and Ayatollah Kevin Martin. 

Everyone from politicians to minority groups are weighing in on the deal demanding a slice of the pie, even though most of them have never invested a cent in either of the two companies and are not subscribers.  Politicians want to protect the public from commercial-free radio just as they did for cable TV.  

It is obvious that the consumer will benefit from the XM/Sirius merger with a broader selection and higher quality of programming for a whole month, at about the cost of a day of city parking.  Satellite radio is already the best deal on the planet, and will be twice as good after the merger.  The DOJ, after long deliberation, concluded that the merger would not create a monopoly, and that the combined company would be just a small niche-holder in a vast universe of ever-changing content providers.  

Jim Cramer and I agree that this merger should be approved immediately without further conditions on pricing, programming, or receiving equipment.  The market will best determine pricing and programming. X/S will respond better to the public without government conditions and restrictions than with them. Requiring terrestrial radio equipment be merged into X/S receivers is unnecessary and protectionist. This makes about as much sense as requiring turntables and CD players be included in digital MP3 players.  The result will be to drive up the cost of receivers and require consumers to pay for equipment that many do not want.  Equipment manufacturers will respond to what consumers want without any government guidance. 

If the FCC comes back with onerous conditions for the merger, satellite radio fans may lose their enthusiasm for the programming and costs will surely rise.  Sirius would do better to reject any demands they have not already agreed to and go their own way. This would likely be at the expense of XM which might struggle harder to survive.  Eventually, Sirius might be the only satellite radio company left anyway, with the freedom to provide what their fans want. Competitors are not likely to try to enter the niche due to start-up costs and the risk of late entry.  

Disclosure: Long Sirius.

Related Articles

This article has 3 comments:

  •  
    May 10 05:10 PM
    First, I don't think it is the FCC Chairman's fault that this merger has taken so long. There is politics being played with this merger imho.

    The FCC Chairman should close down any further comments and move to approve. If the Democrat members of the FCC refuse to approve then lets make it an election issue.

    The merger will likely go through but those who want a piece of the pie continue to do a full court press with calling in Congressman and Attorney Generals that represent a few states.

    As noted it isn't the FCC Chairman that is the problem its the Congressmen, Attorney Generals, Georgetown Partners and other nefarious groups that want a piece of the pie that they did not prepare------as they put pressure on other members of the Federal Communications Corporation Committee.

    If they continue there will be nothing left to replenish the pie as they pick it apart like crows----leaving nothing for the companies and stockholders---as well as consumers buying cars fitted with the satellite radios.

    Whatever happened to our free enterprize system that rewards the companies who pioneer the technology and grow the businesses.

    If these folks want a Satellite system, then let them develope their own.

    Agree with Jim Cramer on this.

    Reply
  •  
    May 10 06:43 PM
    The appearance of the FCC regarding the XM/SIRI merger approval process is to 'punish' the two participating companies until they feel the pain upon approval . . . no matter what. Unfortunately, the stockholders going along for the ride could also be punished if more conditions not discussed nor agreed upon are piled on by the FCC.

    Can you say lack of governmental agency transparency? Or, should you say do no harm to the interests of free radio broadcasters' lobbyists?
    Reply
  •  
    May 12 05:54 AM
    The wait is rediculous. The private interest groups are rediculous. The people including congressmen, AGs, and private interest groups turning this merger into a racial issue is rediculous. The whole process is rediculous.

    I have written several articals on SiriusBuzz.com website forums as well as Fool.com forums stating my arguments on this merger, but it doesnt matter. Politics and money speak much louder than the American Public. Even with all of the support for this merger, this thing has drug on for a rediculous amount of time. It is time to end this thing and approve the merger.

    Reply
More Comments on SIRI ยป
More by Stan Muse

Investment Resources
Money Management 

Research 

Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Radio 

Book Publishing 

Cable 

Diversified Media