Commentary: Consumers may lose in the XM-Sirius deal
Last update: 10:16 a.m. EDT July 24, 2008
NEW YORK (MarketWatch) -- Satellite radio customers may remember July 24, 2008 as a dark day.
The Wall Street Journal reported Thursday morning that a majority of Federal Communications Commission commissioners reached an agreement to allow Sirius Satellite Radio to acquire XM Satellite Radio Holdings
XM and Sirius have competed ferociously for both customers and celebrity hosts. Since they were competitors, they tried hard to feature stars from every corner of popular culture. Howard Stern put Sirius on the map, and XM responded by snaring its own celebrities, even Bob Dylan.
Such a competition-busting combination will hurt the public. When there is only one company in an industry -- even a nascent one like satellite radio -- the survivor is free to act complacently toward the customers.
The lone company can be tempted to cut corners in service. It doesn't have to worry about making constant improvements in programming, either, because it's the only game in town. Crucially, the last company standing can also take liberties with pricing -- because the consumers don't have an alternative in the marketplace.
It's apparent that the promise of satellite radio was so overblown that the budding industry couldn't even support two companies.
That sound you hear is the media naysayer chortling over the prospect of a XM-Sirius combination, saying, "I told you so."
I'm beginning to wonder if journalist have even been following this transaction from the beginning. It's like this guy hasn't even read the DOJ decision. And for him to being up the idea of price increase when its LOCKED for three years, and they are trying to grow subscriber base is so unfounded. Is this his first comment on the merger? Maybe he's just looking to ride the media wave. In fact, I'm sure that what this is.
Jon Friedman... Isn't this the guy who wrote a book "The World Is Flat" in which he explained to us pompously step by step that technology connects the world? Thanks Jon, your insight into the world in invaluable.
EDIT: Not the same guy. Though I am still just as enraged.