Sirius radio shock jock Howard Stern and his XM radio rivals Anthony and Opie often use their broadcasts to take insulting shots at each other. Now that the two satellite radio businesses are considering the prospect of merging, they may consider lightening up on the jabs. Gary Parsons, chairman of XM Satellite Radio, and Mel Karmazin, CEO of Sirius Satellite Radio, met last week and inked a deal to merge the two companies. XM Satellite Radio and Sirius Satellite Radio are two of the most popular forms of satellite radio broadcasting in the United States. For a monthly fee both services offer 24-hour satellite radio broadcasting with stations offering various genres of music, talk radio, sports, news, traffic reports and weather reports. According to statistics on both companies’ Web sites, the merge could potentially boast a listener base of more than 12 million people. At the press conference, the primary issue that arose was that neither satellite systems are compatible with each other. Consequently, a new system would be required to enable the joined companies to function under one broadcast. Karmazin, who would retain his title of CEO under the unnamed conglomerate, offered reassurance to customers. “You should assume that we’re going to continue for a very, very long period of time to offer the Sirius and XM service,” Karmazin said. Karmazin also outlined a plan for a radio system that would pick up both radio feeds. “Once this merger is approved, we’ll be able to work with receiver manufacturers and chipset designers to have a next-generation radio that can pick up both services.” The Federal Communications Commission produces an obstacle that the merger must overcome. The FCC states that one satellite communications company may not buy out another of its kind. Josh Bernoff, a media and technology analyst at Forrester Research, a technology and market research company, said companies have faced this problem before. “This kind of a case actually did come up in the television world,” Bernoff said. “EchoStar said that it would acquire DirecTV, the other major satellite service.” The deal never came into fruition despite EchoStar’s efforts. “And what happened is that after about a year of going back and forth about whether that would actually be in the best interests of consumers, whether it would reduce choices and so on, they had to abandon that merger because they weren’t able to get regulatory approval,” Bernoff said. Bernoff speculates there might be a similar outcome in the Sirius/XM merger. “Given that this is yet another paid satellite service in a similar kind of market, I think that there has to be a lot of scrutiny given to this on the basis that we already turned this down in television,” Bernoff said. “Why does it make sense to approve this kind of a merger in radio?” Another problem the merger faces is an antitrust law, or unfair business practices, prescribed by the U.S. Department of Justice. To refute this, Bernoff said both companies could argue that they face competition with other forms of technology. “The most liberal way to look at it is that everything competes with everything else,” Bernoff said. “And for that reason merging these two similar companies means they’ll still have to compete with iPods and Internet radio and high-definition terrestrial radio and so on.” As far as the company and consumers are concerned, Bernoff said that it helps them both, but the consumer also is at a slight disadvantage. “Well, for the companies the upside is pretty simple: They’ll be able to get rid of competition,” Bernoff said. “They’ll be able to move forward with and will be able to just pursue reducing costs.” Bernoff said the downside will be that the consumer will have less choice but at the same time will have the convenience of getting both services with one receiver. Stephen Rudh, petroleum engineering sophomore, agreed that the new company would benefit from the consolidation. “I see the advantage for XM/Sirius because that way they could dominate the market,” Rudh said. Sociology senior Jordan Signater seemed indifferent to the prospect of a merger. “I don’t see much difference in XM or Sirius,” Signater said. “They won’t gain or lose customers either way. I don’t listen to the radio anyways; I just get my music from the computer.”
—–Contact Logan Donaldson at ldonaldson@lsureveille.com