Investing in Satellite Radio: XM-SIRI DOA?
By Ian L. Cooper
If The Carmel Group’s latest report, “The Proposed Sirius-XM Merger: Its Harmful Impact on Consumers, Content Providers and Performing Artists,” is as influential as its analysis that helped kill the 2003 merger of EchoStar and DirecTV, a merger of the satellite radio giants is dead on arrival.
The report, sponsored by the National Association of Broadcasters, finds that if the merger were approved “every subscriber would be beholden to a single satellite radio monopoly, resulting in less service, less affordability, less diversity, and less choice in content and hardware.”
While the existence of a competitive environment can be established (MP3 players, Internet radio, music-enabled cellphones), the report argues that none of these are substitutable for satellite radio.
In fact, according to the report, “Neither MP3s, nor Internet radio, nor HD terrestrial radio, nor music-to-cell phones are substitutable for satellite radio. For example, as is true of any MP3 device, an iPOD is a storage device, not a receiver. An iPOD cannot access live or new music, sports, comedy, news and talk shows which are compiled, chosen and distributed by a third party, without any effort to collect that music on the part of the listener. This further limits the extremely broad definition Sirius and XM would give to the competitive field of this proposed merger defines.
“Plus, Internet radio and music-to-cell phones are rarely if ever featured as offerings in vehicles. In addition, like today’s HD terrestrial radio, Internet radio and music-to-cell phones are merely delivery devices, and are yet to become full-fledged content services unique from any other. Thus, MP3 devices, Internet radio, HD terrestrial radio and music-to-cell phones remain in the category of audio services that are not substitutable with the services of the only two national satellite radio providers, Sirius and XM.”
From what we’ve taken from the report, consumers will see better benefits in an environment where XM and SIRI compete with one another.
You can read more on The Carmel Group’s findings here.
Take care,
Ian L. Cooper, Editor, Early Alert Trader
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