The two major U.S. satellite radio companies have finally completed their merger after 16 months of regulatory red tape. One of the major concerns had been that Sirius and XM would be creating a monopoly.
I say it is “good” news for customers because they now won’t have to miss out on exclusive programming that had been on one system, but not the other. With any merger, there is also the risk that customers will see higher prices because of reduced competition, but I’ll discuss that in a moment.
CEO Mel Karmazin previously lead Infinity Broadcasting up through a deal with Westinghouse’s CBS radio business, and then headed CBS Radio until CBS became part of Viacom. Subsequently, he was a Viacom executive. He left in 2004 to head up Sirius Satellite Radio, and it is no coincidence that Howard Stern followed Karmazin from CBS to Sirius.
As for Sirius XM:
The combined company has more than 18.5 million subscribers, making it the second-largest radio company, based upon revenue, in the country.
But the company has “significant” growth prospects because it currently has cornered less than 10 percent of the home and car market, it said.
Satellite radio’s differences from “terrestrial radio” include the subscription fees, consistency across the country, more niche programming, commercial-free channels, and more relaxed standards on language. Whereas using certain words at all or certain words in certain contexts on terrestrial radio can mean hefty fines from the Federal Communications Commission, the same is not true with satellite radio.
The new company broadcasts more than 300 channels of programming, including exclusive radio broadcasts from shock-jock Howard Stern, television magnate Oprah and home-decorating guru Martha Stewart.
Don’t forget all of the sports programming!
It would have been easier to argue in the past that this merger would be monopolistic. However, with the rise of large terrestrial radio broadcasters such as Clear Channel, CBS, Citadel, and others; online audio and podcasting; and other communications media and ever-emerging ways of broadcasting and receiving content, letting to satellite radio companies merge is hardly scary. Also, as far as I know, it is still possible, though maybe not feasible, for someone to launch a new satellite radio company. If prices get too high, it will be easy for customers to simply stop subscribing.