Finally, more than a year after the deal was first announced, the Department of Justice approved the merger of Sirius Satellite Radio and XM Satellite Radio. This deal took longer to review than Google’s DoubleClick acquisition. And it is not over yet. The FCC still has to put its stamp of approval on the paperwork. Washington really needs to speed up the merger-review process. Deal, or no deal: it should take no more than six months tops for Washington regulators to render their verdict on an acquisition.
If this merger does go through, as it should, what will the result be? A struggling company with a combined $2 billion in 2007 revenues, $1.25 billion in combined net losses, 17 million total subscribers, and more than 1,500 employees (there’s your costs savings right there). The logic of the deal has always been about reaching critical mass. Satellite-based businesses have huge sunk costs and they need to reach a massive number of paying customers in order to compete.
Will this be enough? Satellite radio is a superior product to terrestrial radio, but it still faces two main challenges: it is not free, and you really only need it in your car. With the increasing diversity of music choices on the Web (both legal and not) and the ubiquity of iPods, terrestrial radio is the least of Sirius/XM’s worries. Maybe Apple should just buy the combined entity and put it out of its misery. I’ve always thought that an iPod/XM radio would be a killer product.
I’m pretty sure Sirius makes a portable player that can store mp3s, and I fail to see why that couldn’t be plugged into a car stereo like any other mp3 player.
And after looking at XM’s site, they also make a mp3 player with satellite radio access.
Probably best to wait until the merger shakes out to look into buying either.
I don’t get what future has in store for these companies. I live in the north of Canada with fewer than 2 radio stations on both am and fm bands so sirius to me makes sense – And I do own one. My problem with these technologies is when wireless internet becomes cheap enough for us here why wouldn’t I just stream Shoutcast or some other free music source. I only see doom and gloom for these companies and wish everyone working for them good luck for their remaining time with employment.
’bout f’n time
thanks to the many bought and sold politicians who tried so hard to kill the merger.
vote nader.
What you guys arent looking at is where this company could really go. Its not about some radio stations they can stick in your car. Its about the data network infrastructure they are building out with hooks into everyones cars. For how long have we been talking about full fledged internet in our cars for tons of services. Well, Verizon could build its network out city by city, which its doing, or you could have a satellite provider offer up the always on blanket coverage everywhere. Think about that. Blanket Coverage across entire countries for a data platform to offer up any service to customers. Now that is powerful. Its not some Radio game, its the future of the web.
It’s About Damn Time. Now if the FCC doesn’t try to F-Up the process by trying to add any additional “BS” to the merger – so they XM/Sirius can keep cost down to the consumer. XM/Sirius maybe now won’t have to struggle against each other for new consumers and have a healthy business and consumers – hopefully – will be able to enjoy the best of both sat. providers in one “XM/Sirius” and better programing with savings to the consumers to whom purchase yearly subscriptions.
Look forward to better listening from XM/Sirius.
Old Ga. Dawg
I only listen to my sirius radio. I haven’t listened to regular radio i two years. I also listen to it on the internet and in the house, I think the people who have it don’t just listen to it in the car, if they have a portable unit.
I recently purchased a new car with a Sirius radio. With the subscription, you also get free web access to streaming from most of the channels.
It’s a fantastic service, and with both web (home, work) and car, it’s a great value (particularly when compared to cable television when I pay a multiple in cost and recieve a fraction of the entertainment)
Asad — great, but there is just one problem: satellite transmission is not a network, it is broadcast. And in the case of Sirius and XM, they have license to a paltry amount of bandwidth, several Mb/s split across >100 channels. That’s why the audio quality is so poor, 50kb/s versus 128kb/s for most web broadcasters.
Finally! I listen to Sirius most of the day – in my house, car, and at work. I don’t miss normal radio one bit! I’m a little worried about the proposed idea of subscribing to packs of channels after this merge goes through – I love having them all – always something new to listen to and explore.
#3 – there are many solutions that work. You found yours. Sat radio has its own proprietary one. Its not going anywhere but up.
#5 – classic idea… Skynet. Tune in to more from FOX next season. Great show.
Sat radio has arrived. Now what? I like the potential uses of the company. Maybe now they can “get sirius about XM radio”. (brand tip) But the business model needs an expansion. Something to boost subscriptions.
Not sure Karmazin is the right guy for that job, but he did a great job getting this merger through. Congrats to him so far.
The stock could ride well one day… good time to buy?
about time!
I haven’t listen to “terrestrial radio” for over two years! Stern nation lives
No More Bullshit!
I couldn’t agree more about the iPod/XM combo device. Add in the ability to tag and buy a song OTA and you have even more revenue for Apple.
@5 great point…
Totally disagree with you about satellite radio only being useful in the car. We listen to it all the time in the house and I also tune in at work.
@danb I wont pretend to know the first thing about bandwidth, but isnt that something they can lease or purchase now that verizon and others have to open up? Regardless, they are now starting to send video over the broadcast, so they seem to be able to have enough to serve peoples needs.
@NZN I have no clue what you just said. Terminator?
Look, there has got to be a better way to blanket large areas with internet access than with putting up wifi signals one by one by one. If they get the technical side right this really could be it. They could use the whitespaces google is referring to with their wifi 2.0 initiative they launched today.
I was just thinking, why cant DirectTV and DishNetwork compete in this space? They already have all the content and the distribution method. They just need to work on making their receivers small enough to fit in a head unit or boombox, and continue receiving the signal as the car is moving. How come they havent made a big move in this space?
Asad: They only increase bandwidth by adding new satellites:
http://satellit...-satellite.html
That’s why the satellite business is so fragile — the cost of the satellite + launch, plus a 10 year lifespan is a hard pill to swallow.
You got that right about “it’s not free” still being a major challenge. The systems also suffer a lack of local programming. If you live in a small/medium size city, satellite radio won’t carry local traffic so you’ll be listening to terrestrial radio during your commute anyway while paying for an unnecessary subscription. The merger does nothing to convince me that satellite radio is worth paying for: http://lowtecht...atellite-radio/
>How come they havent made a big move in this space?
Cuz they’ve looked at the balance sheet for XM and Sirius and seen that there’s no money to be made in it.
1) Small, finite amount of bandwidth combined with 2) large overhead production and administrative costs and 3) no potential for advertising revenue is a bad combo. Dealing with #1 and #3 aren’t options so the target has to be #2: bringing down costs while maintaining content quality.
Hi. Nice post. Jez
whatever. i listen to sirius on my laptop more than in my car.
It’s not XM Radio, but Fly Tunes has done something similar for the iPhone.
I posted this over on my blog, but unfortunately Engadget beat me to the punch by a month.
http://www.enga...adio-to-iphone/
@danb, #9 – Despite that the bitrate is somewhat limited, I get far better sound through my XM radio than I do from any radio station here in the Sacramento, CA area.
I commute almost daily to the bay area from Roseville and it never fuzzes out like the local FM stations. Because of this, I am an XM fan for life.
As far as the bandwidth goes, give it some time and I think we will see some amazing stuff from Sirius/XM. I foresee the two-way communication and advanced computer communications really soon. Just look at OnStar. It uploads data from my car and emails me reports whenever I need to do stuff like change my Oil or put air in my tires. This is just the beginning.
They have duplicate infrastructure, duplicate people, duplicate content like CNN. You support twice the people with half the cost, you can make pricing concessions and still make a lot of money. I see them probably auctioning some spectrum and cutting deals for wireless access on your phone and others. Plus, mobile live TV is on the way. Also, what Joel said,two way anything if you want or mobile internet access that is hands down great. Finally, I could see Google buy them in a heart beat. Spectrum, content and a recurring revenue generator. Better than youtube, for sure.
I’m not sure how you can say that consolidating the only two players into ONE company was a solid move? It’s certainly not a good move if you consider competition in the market to be a good thing.
I am also not at all happy about Clear Channel being involved at any level in my satellite radio.