Who's going to pay for the Sirius-XM merger? How about Howard Stern?
It seems like the Sirius-XM merger been dragging on for years, and both sides are eager to get it done, but what would I get out of it? I've been a happy Sirius subscriber for years. I love the commercial-free music channels, and the uninhibited talk channels are hugely entertaining. At least maybe Sirius' sound quality will get closer to XM's--it's always sounded a little better.
They still need approval from the Federal Communications Commission before the deal is done. If you ask me, it seems anticompetitive to let the only two satellite-radio companies in the U.S. merge. Both companies' subscriber bases are at record highs, but both claim they need the merger to survive. They've both far exceeded the numbers they claimed they needed to be profitable when they started.
Sirius must be overpaying Howard Stern--because even with all the new subscribers he brought them, they're still losing money. He's sucking the profits out of Sirius--perhaps Stern should consider a pay cut to help them out? He can afford it more than his listeners.
What does the merger mean for satellite radio subscribers? There's a lot of duplication between Sirius and XM's programming so we'll surely lose some of our favorite programs or channels. There will no doubt be winners and losers in the reshuffle.
But without Sirius-XM competition how long will the merged company wait before they stick it to the subscribers and jack up the rates? Yes, some say the merged company will still be competing with broadcast radio, but isn't that like saying movie theater ticket prices are somehow kept in check by DVD prices? Somebody's gotta pay for the Sirius-XM merger, and I have a feeling that somebody is us.
Steve Guttenberg is a frequent contributor to magazines and Web sites including Home Entertainment, Playback, and Ultimate AV. He is a member of the CNET Blog Network, and is not an employee of CNET. Disclosure. 
I have a funny feeling that as a XM Radio subscriber I am going to have to buy new hardware. Maybe not right away, but within a 12 months to 18 months after the merger is said and done it will probably happen.
Then there will be price increases. Not right away but give it time. It will happen. First it will be small. Only a $1.00 or two. They will tell us that there has not been a price in crease in years so what is a $1.00 extra a month. Then another $2.00. Then premium packages. Want that block of 5 news channels? That will be an extra $1.99 a month. Want a Sport package? Another $1.99. Want NFL games? First you have to get the sports package... then you will have to get the NFL games package... for another $2.99 a month for the NFL season.
Before we know it satellite radio will look like cable television. Paying through the nose to get a few channels we want with terrible sound quality due to over used bandwidth limitations.
Plus, the only way the FCC and DOJ is allowing this to go through is because Sirius/XM have promised NOT to raise prices! The money that they'll save comes from cutting their work force, and combining advertising budgets, and not competing against each other.
I've already received written confirmation from the company that the agreement will be honored, so I'm not concerned they'll cancel the deal, and as an attorney, I know how to enforce these things, so I'm not concerned with making them live up to their promises (e.g., about three years ago I forced their VP of Customer Relations to write me a letter on corporate letter head waiving the transfer costs and limitations on the number of transfers because when we bought the "lifetime" subscriptions Sirius did not adequately disclose the fact that the subscription could only be transferred to three successive radios and on the fourth attempt would be cancelled; that letter is safely tucked aware in my fireproof safe).
This is a business. It should be able to explore strategic mergers and acquisitions and provided it receives regulatory approval and consumer support, be allowed to do as it wishes without people trying to tell its talent to give up money for their sake.
The "who the compete against" argument is over. DOJ made its decision, it was clearly the wrong one, but consujmers have to live with it.
and here's another quote: "Both companies compete primarily with free services. Executives from XM and Sirius both made it clear that they do not want to slow down the adoption of satellite radio, so they hope to not increase the subscriber price, but to gain new revenues from new services: video, navigation, and advertising. "
That is where I got the promised to fix prices. As a condition of the merger, if Sirius were to raise prices, they'd get slapped, hard, by the FCC and have a ton of fines thrown on them. Perhaps reading some more on the actual merger would provide better insight. There is already talk of Sirius TV (I think it might be out, I can't remember) for in the car use. Soooooooo.. how is this BAD? Noone has come forth with a good argument other than "it's bad and they'll raise prices!" They know the instant they raise prices people will start leaving.
I'm sure Howard Stern's paycheck pales in comparison to the gentlemen employed by whichever investment banks are advising both XM and Sirius. And what about the executive teams of both XM and Sirius. I'm quite sure that the fat-cats at GM who hold a majority stake in XM aren't taking a pay-cut on this deal.
Steve, no offense, but your argument sounds like you just don't really like the fact that Howard Stern is a highly paid talent. If you were to calculate the number of subscribers that joined since he was hired, he has more than paid for himself. That's not even counting the advertising dollars that his show generates for the 30 or so minutes that are sold for the 5 hour show. If the management of Sirius keeps spending their money in the wrong ways, why should Howard be the one to pay the price? He isn't responsible for budgeting, marketing, programming, etc. except for his role on his channels. The fact is, he's doing a very respectable job in attracting both talent and listeners in his little "howard stern" world. I'm sorry for XM folks who don't want that, but it's certainly their choice not to have the XM / Sirius service. One can always plug an Ipod into their car, or listen to HD radio, or just plain old FM radio.
He's the flip side of that argument: I can't imagine why I would want to pay for Opie and Anthony, INDY racing, NHL or.... the queen of irritating --- OPRAH! 55 Million Dollar contract? What a waste of money. She isn't even on more than 2-3 times per week. But honestly, I don't care, because the service is just awesome and I will HAPPILY pay up to around 20 bucks a month to not have to listen to commercials and all the **** that commercial terrestrial radio represents.
Anyway, Steve, thou doth protest too much. Let the merger go through, and then at least we'll have 1 satellite radio option instead of none.
It hasn't happened yet, and I'm already mad.
Is this is the Steve Guttenberg who's supposed to understand tech, or the Steve Guttenberg from the Police Academy flicks fearmongering because he's afraid his P.A. DVD residuals might not be enough to cover the fee?
And what is the big deal about buying new hardware? I'm on my 2nd Sirius unit and would probably pick up the Stiletto if I weren't holding out for the post-merger hardware. The things are cheap enough (well, maybe not the Stiletto, but that's far more than just a sat. radio) and the tech improvements alone make a regular upgrade cycle worthwhile. My first unit was the size of a brick, slow to change stations, had no buffer, an ugly orange screen, and got hot enough to warm my hands on a cold day. My current one is the size of a small candy bar phone and can pause and rewind a good half an hour of audio. Newer units will have the kiddie TV output functionality. I wonder if these same people whining about having to upgrade (which is years down the road anyway) are the same ones who whine that they can't run Vista on a Pentium 3.
There's plenty of other choice out there. You could drop $50 a month on a solid unlimited 3G plan and listen to any internet radio you want in car. And if you're cheap and still want your Stern fix, you could always torrent the latest show to your iPod and get it free, just listen to it the next day. It's not like he's not on repeats and best-ofs every other week anyway.
Fact;
Sirius or XM are not a mandatory for the American consumer to have in order for them to listen to music or talk radio, therefore the prices will be controlled by guess who ? hmmmm . did you guess yet ? THE CONSUMER. Yes imagine that a market controlled by its listeners.
Fact;
The FCC can't place programming restrictions on Sirius/xm because we pay a premium to listen to it much like you pay to watch un-cut movies on HBO etc.
Fact;
XM is currently renting their sat. space to where Sirus owns their own sats and actually according to technology professors at M.I.T. are much more advanced than XM in the tech. department. And as a person who has owned both Sirius and XM radios. Sirius has better quality, less interference, and much better programming choices.
Fact;
As for his Howard Stern comment which afterall is a headline to get people to read his clear channel sponsered article.
When Howard Stern signed with Sirius they had 643,000 subscribers, now they have 8,146,592 subscribers and counting, and after the Merger will have 20+ million subscribers also they will be sharing expenses condensing their channels and giving sports fans a fair alternitive when it comes to MLB, NFL, NASCAR etc. I dont know why everyone is so afraid of this merger maybe its because they just don't want to see stockholders like me who owns 5,000 shares of XM and Sirius stock make money when the profit margin forces the stocks to trade at 22 dollars a share.
FCC Sign off on the deal allready don't be just another reason for the world to see that the "American Way of Life is dead"
Don't blame Howard Stern for making a great contract, do your own job and worry about yourself.
2. NO PRICES INCREASE - Confirmed
3. HOWARD STERN CHANGED THE FACE OF SAT RADIO (And Saved Sirius) - 600,000 pre-stern and 10 million after... You might not have gotten it because of him but you started hearing about Sirius Radio's because of him...
4. Al-a-Cart Price plan lets you pick your Favorite Channels... SO MANY more choices for cheaper if not same price...
5. Record High Subscribers doesn't equal Cash - they have spent alot on Duplicate Advertising... and there was the issue XM had with it's hardware outage and that broken SAT in space... and Sirius had issues with some of the First Radios..Also, let's Remember Guys what they are doing... THEY ARE LAUCHING ROCKETS WITH SPACE SATs in orbit... I am sure that's not Cheap... LOL
6. NO COmmericals on Sirius.. That will not change... Mel was qouted
BABABOOEY!
- by dsommer March 31, 2008 7:27 AM PDT
- Wow...Steve - Do you do ANY research before you write your blog? Sirius and XM put a pricing structure in place for the next few years after the merger, so they won't be raising prices. Also, do you really think they're going to raise prices when their main competition is FREE? People don't HAVE to subscribe to either service because its just that, a service. If they raise prices, people cancel. Its as simple as that. Not only are you uninformed, but I'm left questioning your business IQ as well.
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