Ibiquity Seeks Inclusion – Georgetown Partners Seeks Handout
In a filing with the FCC, Ibiquity, the company behind HD Radio, is seeking inclusion into all satellite radio receivers should a merger be granted. Ibiquity still takes no official stance on the merger, but does call the merger a monopoly. Ibiquity feels that satellite radio has entered into exclusive subsidized arrangements with automobile manufacturers that could preclude HD radio from gaining a foothold in the industry.
Interestingly, though full details of many OEM agreements are not public, there has never been any indication that the “exclusive arrangements” have ever been exclusive to anything but satellite radio products. Indeed, HD radio already has deals in place with BMW as well as Ford.
In my opinion, Sirius and XM should not be penalized for coming to arrangements with auto manufacturers, nor for subsidizing the installation of receivers. Both Sirius and XM have invested large sums of upfront money to pave the way for their services to get into the dashboards of automobiles, and beyond that have given many OEM’s a share of revenue.
For these reasons a requirement to include HD radio into satellite radio receivers would be tantamount to letting another business model avoid the heavy costs that have been born onto the shoulders of stockholders in Sirius and XM. There is no free ride these days. Is Ibiquity planning to pay any subsidy? Are they willing to share revenue with OEM’s, or even Sirius and XM?
For Sirius and XM to get where they are today was a process that Ibiquity wants a short-cut on. To provide that shortcut without remuneration seems unrealistic. Why should shareholders of Sirius and XM be required to bear the burden that Ibiquity themselves seems unwilling to bear?
In a second filing, Chester Davenports Georgetown Partners is seeking a sweetheart deal of a requirement for Sirius and XM to lease 20% of their channel capacity for this “diverse” company to operate and run. Once again, why should current investors be asked to sacrifice 20% of their capabilities and infrastructure to Georgetown Partners? Further, why is Georgetown Partners negotiating with the FCC rather than Sirius and XM? Is is right that a broad statement such as a requirement of 20% of the bandwidth be proffered to the government instead of the Boards of Sirius and XM? The Boards have a fiduciary responsibility to the shareholders, the FCC has no such tie. Why has Georgetown Partners not identified the dollar figure which they are proposing? Why have they not demonstrated programming concepts to fill 40 channels of programming?
Filings such as these grow tiresome quickly. Since when does a proposed merger mean that the FCC is now in charge of a welfare program? Quid Pro Quo happens in Washington. Handouts do as well. Just because it happens does not make it right. Shareholders of Sirius and XM have endured years of these companies growing pains. They have endured recapitalization, dilution of shares, and an onslaught of competition such as iPods and cell carriers offering content that was not imagined when the services launched. Asking shareholders to give 20% away to Chester Davenport, and to include HD Radio into all receivers without real remuneration is simply asking too much.
Position – Long Sirius, XM
These guys are living in a fantasy world. Are these kinds of concessions normal in the business world? 20%!?!?!
the strategy they use is simple. Our government is known for handouts. They will get whatever they can.
Georgtown partners pants a broad brush tale of being competition for satellite radio, but does not tell the tale of the rip-off of shareholders that is required.
If they want 20% of Sirius and XM, they can buy it at any time…..symbols SIRI and XMSR
I’m unsure about Ibiquity’s position — although, if XM/SIRI are going to claim HD is “competition” for purposes of NOT treating them as a monopoly, then a reasonable argument can be made that they ought to have to truly “compete” with HD (one of the “competitors” who are purportedly keeping them from BEING a monopoly). OTOH, XM/SIRI have bought and paid for their placement in vehicles and it is hard to argue that equity should just be GIVEN to HD.
The position of Georgetown, OTOH, makes total sense and is one that FCC ought to have to address. XM and SIRI are asking FCC to reverse a fundamental premise of the license grants — i.e., that one provider cannot hold both.
The creation of a monopoly (via spectrum allocation) in sat radio when there are other providers who desire to use that spectrum to bring diversity to the public is a position that ought to receive due consideration.
The FCC, since spectrum began being auctioned, has held the position that promoting competition and diversity are good things. XM and SIRI are demanding that FCC reverse that position in allowing them to create an unregulated monopoly — an action which should not be taken lightly.
I’m not saying Georgetown ought to have its way, but it certainly warrants consideration and their request is absolutely reasonable in the context of what XM and SIRI are trying to do.
As to directing the request to XM/SIRI, that obviously is NOT the appropriate action for Georgetown here. XM and SIRI aren’t about to give up their most precious resource unless SOMEONE makes them. The entire point of the merger (Mel’s BS notwithstanding) is to get a monopoly. So, they’re just going to hand over their spectrum without FCC forcing the matter? No way.
Your conclusion that Georgetown should be approaching the companies rather than FCC is utter nonsense. Georgetown, to have a shot at what they’re trying to do, would be reliant on FCC to impose the requirement on XM/SIRI.
Perhaps FCC will decide against what Georgetown is suggesting; however, the request ought to be given due consideration and FCC ought to explain exactly why they refused Georgetown’s demands, if they do so.
Georgetown Partners is seeking a handout. No discussion of what the “lease” would be nor any discussion on what they plan to do with that bandwidth.
If they want into satellite radio, why should Sirius and XM be required to give up their infrastructure to accomodate it?
If the discussion is as simple as giving up part of the spectrum so another company can launch their own satellites, cut their own deals, etc. then that is an entirely dif. animal.
These guys basically want an business with assents staff, etc. handed to them on a silver platter. This is about as far from capitalism as you can get.
The FCC is not in the business of creating businesses, andcertainly should not simply hand something over to Georgetown partners
Got any spare change? … Spare change?
>>>If they want into satellite radio, why should Sirius and XM be required to give up their infrastructure to accomodate it?
The point is taken, but what good is infrastructure if you don’t have any spectrum? You suggest that Georgetown wants a handout, but is it not true that they are saying they would lease the assets (presumably at fair value)?
XM and SIRI are wanting to create an unregulated monopoly which is obviously and indisputably against the public interest — if they are going to receive that MASSIVE benefit, they SHOULD have to give something up.
One could really argue the point opposite yours — that Georgetown is giving XM and SIRI an opportunity to BENEFIT by receiving cash for the use of assets that would be idled by a lack of spectrum, were they required to simply give up spectrum.
Obviously, XM and SIRI would prefer to get their monopoly and have all the spectrum to themselves. But if they are going to be required to give up spectrum, is it not to their benefit to lease out the assets that are tied to that spectrum (and wasting assets involving sunk costs, at that).
Sensibly, the FCC ought to say, “XM and SIRI, you can merge if you want to — BUT, you have to give up part of combined spectrum”. After all, that IS a condition of the licensure. Wouldn’t an opportunity to lease the infrastructure utilized by that spectrum be fair for XM/SIRI?
XM/SIRI want to have it all and to roll over the sat radio consuming public in the process — that is obvious. It is FCC’s job to prevent that abuse.
You say the FCC isn’t in the business of “creating businesses”, but that is PRECISELY what they do when they auction spectrum and grant licenses. They control the scarcest of resources.
There is also the issue, as you pointed out, that if the monopoly is created, ALL of the OEMs will have exclusive long-term contracts. Does that really provide a fair opportunity for a third [second] party to enter the market and provide competition? By requiring the lease of assets to that party, presumably they can have an opportunity at existing OEM installs.
The idea is for the FCC to promote competition, while XM/SIRI want to eliminate ALL competition. Georgetown is proposing one way of accomplishing this. I don’t believe it should be shut down without due consideration.
Frontmed. I am pretty sure that if the FCC thinks that some of the spectrum should be put back up for auction then these clowns could bid for it.
If they want a lease, talk to Siri and XM and I’m sure they could arrange a price. Don’t be surprised when siri/xm comes back and gives them a price and they don’t like though, citing that they “can’t make money” because siri/xm went through those growing pains too, hence the debt they carry.
As a shareholder, if they want 20% of the spectrum which guarantees the merger will go through, then so be it… provided we can charge them 20% of total capital up front for all infrastructure spending that XM and SIRI have ever incurred.
Take that capital, pay off some debt, merge, give up 20% spectrum, slash 20% of channels. Fine by me.
Also, they can pay ongoing royalties to have our receivers receive their signals, they can also pay for R&D we have incurred over the years.
>>>>>> As a shareholder, if they want 20% of the spectrum which guarantees the merger will go through, then so be it… provided we can charge them 20% of total capital up front for all infrastructure spending that XM and SIRI have ever incurred.
This was precisely my point; the idea of leasing Georgetown some stuff isn’t altogether a bad one. If XM/SIRI are going to be forced to give up spectrum (which ought to be at least considered by FCC), then XM/SIRI might well enjoy the opportunity to recover some of their investment in infrastructure which wouldn’t be needed.
I don’t see Georgetown as asking for a handout necessarily (although, perhaps that’s what they have in mind, we don’t know) — the context, as far as I’m aware, might be “allocate 20% of bandwidth to us, and we’ll take the excess capacity off XM/SIRI’s hands via a lease so they aren’t losing on their infrastructure spending”. That might well be a workable arrangement for XM/SIRI which would be preferable to just having to give up one of the two licenses.
I haven’t said it should or should not be done; just that it is a reasonable proposal that ought to be given due consideration. XM and SIRI could use the additional cash and if the alternative is to give up 50% of the spectrum, they may actually LIKE the idea…
The pro-merger forces are just too quick, IMO, to criticize ANYONE who opposes the merger. In asking for a monopoly, XM and SIRI are asking for a HUGE, anti-consumer concession on the part of FCC; they should expect to have to give something up in the process. If they are not expecting it, they are being naive IMO.
Any talk of XM or Sirius “giving up” spectrum to anybody must consider that these companies paid about $90 million EACH for their 12.5 MHz of spectrum in 1997. The companies and their shareholders would weigh this carefully if it actually becomes a concession to a merger–it could be a deal-breaker. Leasing it could be another story, however (although existing XM and Sirius radios would have to be used to receive this leased content, as the companies testified to Congress that their existing network infrastructure will stay in place for another decade).
An FCC auction for bandwidth or a license is not giving a business. Winning bidders must still do many things to become viable.
What Georgetown partners is proposing is a forced lease complete with brodcasting satellites, satellite support technical support, hardware R&D, hardware, access to exclusive OEM deals, and marketing. This is a business on a silver platter, and that is not what the FCC is about.
The Georgetown partners proposal would piggyback on all of the work and effort performed by Sirius and XM for a lease fee that has not even been discussed.
For months now, they have brought up the same thing, and never once outlined any REAL plans, budgets, or timelines.
If the FCC were to consider surrender of bandwidth, it could well be a deal breaker. But, assuming it is not, the surrender should be bandwidth only, and not access to everything else.
>>>>>>>> What Georgetown partners is proposing is a forced lease complete with brodcasting satellites, satellite support technical support, hardware R&D, hardware, access to exclusive OEM deals, and marketing. This is a business on a silver platter, and that is not what the FCC is about.
They’re not talking about “forcing” XM/SIRI to do ANYTHING. They are talking about giving XM/SIRI an anticompetive, unregulated monopoly (a very valuable prize), in exchange for certain conditions — conditions that appear on the surface to be pretty reasonable. If XM/SIRI don’t want the conditions, they can simply leave things like they are, and abide by the terms of the prior license agreement (i.e., the agreement that both licenses could not be held by the same licensee).
>>>> If the FCC were to consider surrender of bandwidth, it could well be a deal breaker.
This may well be correct. But should these companies be granted monopoly status — an act which will damage consumer interests irreversibly, without having to give anything up in exchange? Of course not. It makes no sense whatsoever.
One must fully comprehend the history of the satellite radio business to recognize what XM/SIRI are asking for. The licenses were granted, not only with a condition that prohibits a merger of the two licensees, but with a guarantee (by FCC) of no further competition during the startup phase of operations. We are now beyond the period of that guarantee, and it is FCC’s responsibility to insure that, if possible, there is competition in the satellite radio industry. If XM/SIRI want to merge, fine — but they shouldn’t be protected from competition going forward, and Georgetown is proposing one way of providing competition.
You are a merger proponent, so anything that makes the merger more difficult, you’re against. However, the entire point of antitrust law is to promote competition, and XM/SIRI want to just have 100 years of settled law upended.
Should they not be required to give up something in exchange for being awarded an unregulated monopoly? If not, why not. If so, what do you think is a reasonable exchange? You seem to be opposed to XM/SIRI having to give anything up in exchange for this valued prize.
Frontmed….
Are you calling the Georgetown Partners proposal reasonable?
I know you are against the merger, but let’s be realistic.
1. They are seeking 20% of the channel capacity.
2. They are seeking the use of Sirius and XM’s satellites
3. They are seeking all support for those satellites.
4. They are seeking access to Sirius and XM’s repeater networks.
5. They are seeking instant access into the OEM channel.
6. They are seeking instant access to millions of existing receivers, and presumably all future receivers.
7. They are seeking to be paired with superior content on these receivers.
8. They are seeking the benefit of piggybacking onto all Sirius and XM marketing.
9. They are seeking to piggyback onto all future R&D.
Simply stated they are seeking a business to be handed to them where they inherit minimal risk, and have no need to promote.
What Georgetown Partners is seeking is well beyond what should be discussed in the matter. Primosphere’s argument is a better argument that Georgetown Partners.
If the FCC wants to enable competition that is fine, but don’t do it at the expense of existing business and force Sirius and XM to support the effort.
Davenport is seeking as much as he can. I can’t fault him for that. However, if the FCC were to ever support and mandate (as proposed) such a decision, it would be a sad day for capitalism.
My God, even satellite radio in Canada (a whole nation) required a 5% commitment in Canadian content.
I know you are a big XM fan. Setting the merger aside for a moment, what would your opinion be if such a proposal was put in front of XM?
Lastly your assertion that this will be an unregulated monopoly is not correct. The Department of Justice will make that determination, and the FCC will bring some stipulations with their decision.
The competitive landscape is far more diverse than you as an anti-merger person would care to consider.
I-Pods in cars, terrestrial radio, products such as Slacker, cell phone that are becoming more and more equipped all compete for the listener.
I can virtually guarantee that you would be outraged if such a proposal was ever forced upon or even suggested in your own business.
>>> I can virtually guarantee that you would be outraged if such a proposal was ever forced upon or even suggested in your own business.
Sure. Unless I were receiving an unregulated monopoly in the process.
>>> Lastly your assertion that this will be an unregulated monopoly is not correct.
People can disagree about this all day long, but any reasonable interpretation of current antitrust law will find that this merger creates an unregulated monopoly. It is a fact that DOJ may choose not to enforce the law in this instance, but their doing so is a political judgment, not a legal one.
Frontmed, I used this argument the other day. Satellite radio is merely a medium of audio delivery, the “satellite radio market” does not exist. It is a part of the radio market which is a small part of the audio market.
Imagine there was 3 cell phone companies: two were CDMA and one was GSM. This would imply that the person using GSM is a monopoly by your argument because he uses a different medium to provide the same service.
Just because other mediums other than satellite radio have not paid to secure content doesn’t mean that they don’t compete. I suppose by your logic, SIRI has a monopoly on audio broadcasts of the NFL within the satellite radio market )if that’s the definition of the market). You should have filed a complaint about the monopoly becuase you are an XM listener and that is outrageous!!!!
There is nothing stopping terrestrial radio from paying for talent and syndicating it. There is nothing stopping Slacker competition.
Sat rad has a competitor for every service that they offer and more competition sprouts up by the day. Anyone who believes this is a monopoly is seriously misinformed.
What is going to happen if they merge and they start charging you 30 dollars a month? You’ll listen to terrestrial radio, podcasts, buy a slacker, internet radio, cellphone… etc etc.
Frontmed, I honestly think you are arguing for the sake of arguing.
>>> Frontmed, I used this argument the other day. Satellite radio is merely a medium of audio delivery, the “satellite radio market” does not exist. It is a part of the radio market which is a small part of the audio market.
The argument is an ignorant one.
There is almost no similarity or connection between sat radio and terrestrial — not merely the method of delivery, but the fundamental model on which the business is built. The way in which the product is sold. The fact that the music content is free to terrestrial and expensive for sat radio. What are the similarities? They are both broadcast. That’s it.
I’m sorry, but your remark reflects a total lack of understanding of the issues.
Competition? Nobody ever said sat radio doesn’t “compete” with other technologies. But that is simply not the issue for antitrust purposes. I refer you to FTC v. Staples, which is precisely on-point with the sat radio merger case. By your definition, there is no such thing as a monopoly. Railroads compete with trucks. Does that mean you can’t have a monopoly in railroads? Of course not.
What matters is the definition of the relevant market for antitrust purposes. Now, I have no illusions about whether the politics of the situation will dictate that DOJ not challenge the merger — they may choose to let it go (it has been said of DOJ lately that there may be NO MERGER which they would challenge under the current environment). But if one looks at existing law, clearly, the sat radio merger is anticompetitive and should not be permitted.
>>> What is going to happen if they merge and they start charging you 30 dollars a month? You’ll listen to terrestrial radio, podcasts, buy a slacker, internet radio, cellphone… etc etc.
You may, I may (actually, I probably wouldn’t, in that none of these other items gives me what I can get at XM), but again doesn’t have anything to do with the question of whether these are “substitutes”. Because no other technology at this time is able to deliver the fundamental product of sat radio (real time broadcast of 100+ digital channels to your OEM installed receiver), there is no other product that will fill the requirements of sat radio.
The lack of understanding of this issue is widespread, and IMO, is a result of a superb sales job carried out by Karmazin. But that doesn’t make it right.
You got a good laugh out of me with the railroads vs. trucks things.
Free radio and satellite radio both have DJs, the same music, talk radio, exclusive content (free radio used to have Howard Stern exclusively as I recall), sports, etc, etc.
Cost has nothing to do with it neither does the business model… so you’re saying that if satellite radio went to a free model where they charged ridiculous $$ for national ad space that it would be ok and that would prevent it from being a monopoly?
In your words “I’m sorry, but your remark reflects a total lack of understanding of the issues.”
How is it so anticompetitive if Slacker is planning on competing? What about this wi-max? Cell phones?
>>>>>>>”no other technology at this time is able to deliver the fundamental product of sat radio (real time broadcast of 100+ digital channels to your OEM installed receiver), there is no other product that will fill the requirements of sat radio.”
The fundamental product is MUSIC, NEWS, TALK and SPORTS. As I recall, HD radio is digital and if they wanted to I’m sure they could start revenue sharing with OEMs to provide “digital channels to your OEM installed receiver”
Also, no product is a direct substitute…
There are plenty of products on the market that are one of their kind but they still compete with other things. It’s called innovation.
You, sir, are grasping at straws with your narrow definition of what XM offers. It’s like saying iPhone is a monopoly because of all the things they offer on one device and there’s not another device that can do all of that.
>>>>>> It’s like saying iPhone is a monopoly because of all the things they offer on one device and there’s not another device that can do all of that.
This entire issue is about just how broad (or narrow) the market definition should be — defining the iPhone in its own class as you’ve done is likely an overly narrow definition just as defining satellite radio’s market to be “all in-vehicle audio entertainment” is far too broad. The question is one of reasonableness.
It is technically true that a couple of the features of the iPhone are unavailable elsewhere, but those features are probably insignificant (unless one includes the “cool factor”, which perhaps should be considered).
Of course, even if one defines the iPhone’s market to be monopolistic, that doesn’t matter, since they aren’t trying to merge (if one creates a monopoly through innovation and doesn’t employ unfair trade practices in the process, there isn’t much the government can or should do about it).
Assume there is another phone — the xPhone, which has the same feature set as the iPhone, and they wanted to merge. Would such a merger be prohibited? Probably not, because the significant feature set of the iPhone is available in tons of places. That they can download movies, for example, isn’t important if/until that feature becomes an important distinguishing characteristic.
There are many, many characteristics of sat radio, in fact, ALMOST ALL significant charcteristics, that distinguish it from terrestrial, from iPods, from Slacker, etc.
When one looks at the history of antitrust litigation, it is quite clear that these important characteristics are what has mattered in past cases. The analogy of the sat radio case to the Staples case is striking, and if the merger is permitted, there is no way to explain the inconsistency.
This is all totally besides the FCC point that they specifically prohibited both sat radio licenses to be held by a single provider. Little has changed in the intervening time frame to warrant rescinding that condition — we still have terrestrial radio as we did then, we still have recorded media as we did when the rule was made, and there are still no other businesses broadcasting 100+ channels of real-time, digital content to vehicles for a monthly fee.
First off, Frontmed, before going any further I’d like to say that I appreciate having an intelligent discussion about the matter.
All I’m saying is that a “significant feature set” of sat rad is available in other places. Free/HD radio has the ability to broadcast digital channels to your car. They offer talk, sports, music, news and otherwise.
SDARS has built a competitive advantage primarily over free radio (as opposed to eachother) by signing content. While content exclusive to one SDARS provider does provide an advantage over the other, the primary purpose of signing content is to attract subscribers to your SDARS service and away from free radio/alternatives.
This is evidenced, for example, by the fact that SIRI didn’t get a large boost from NASCAR, XM didn’t lose significantly. When subscribers leave one SDARS service they choose other alternatives.
With regards to the FCC, the ex-commissioner who made the ruling about 2 licenses has already come out and said that they didn’t anticipate the mobile media market to be as it is today. Therefore the decision should be reviewed and, going back to the original discussion, if they decide that 20% of the existing spectrum should be rescinded then so be it. But do not expect to use existing SIRI/XM infrastructure.
Keep in mind that SIRI/XM only have 50% of the originally proposed spectrum and I’m not sure, but I would imagine that the spectrum is still available (?). This way they would not have to take spectrum away from XM/SIRI and then these clowns can have some spectrum space at a cost.
>>> Free/HD radio has the ability to broadcast digital channels to your car. They offer talk, sports, music, news and otherwise.
Yes, HD can do that — but it differs fundamentally from satellite radio in that it is ad-supported, doesn’t provide a choice of 100 channels, is not nationwide, and therefore does not deliver something remotely similar to sat radio. While it is true that HD is digital, it really is no different from terrestrial in these other important respects.
>>> SDARS has built a competitive advantage primarily over free radio (as opposed to eachother) by signing content.
I strongly disagree with you here. The competitive advantage of exclusive content is as between XM/SIRI, not as between sat & terrestrial. For example, MLB/NFL/NCAA games are available both on sat & terrestrial, but each is exclusive to one particular sat radio company (with a few exceptions). Same with NASCAR.
Be that as it may, exclusive content is transitory — it is clear that going forward, sat radio will not be paying the big dollars exclusivity demands. For example, when Stern’s contract is up it is clear that he will either have to take a HUGE pay cut or he’ll be history. The same is true of NFL and MLB — neither of which is paying its own way on sat radio. Since Mel arrived at SIRI, there has been little in the way of exclusive content added, and that is a trend that will continue if either company is ever to make any money.
>>> This is evidenced, for example, by the fact that SIRI didn’t get a large boost from NASCAR, XM didn’t lose significantly.
This was predictable and in fact, you can find posts all over the place where I said that would be the case. The fact that XM wasn’t willing to pay $21M/y for NASCAR suggests that, having had 5 years experience with it, they knew that raceday broadcasts just aren’t that important; it is the talk NASCAR fans are interested in (most of them are home watching the races on TV).
>>> With regards to the FCC, the ex-commissioner who made the ruling about 2 licenses has already come out and said that they didn’t anticipate the mobile media market to be as it is today.
But there is iron-clad evidence that refutes this claim — in the original FCC Report and Order, market share expectations were clearly set out — and in the time since its inception, satellite radio has actually EXCEEDED those expectations. The ex-commissioner is earning his pay;)
I doubt we’d ever agree on these things, but the reality is that nothing has changed since day one — most people still listen to terrestrial, recorded music is still available, and satellite radio still provides content that isn’t available anywhere else — including live sports, real-time news and talk, rebroadcasts of FNC and CNN, and 70 channels of commercial free music — no other service can provide all of this in a single bundle.
Market share is not the point of debate with regards to the FCC, but rather the market environment which is vastly different. Slacker, internet radio, ipods, HD radio all did not exist. These are all significant developments. Plus, we all know why they exceeded market share expectations: Howard Stern. This also proves my point that content is used to compete vs terrestrial not the other SDARS provider because the other provider benefitted as well from this content deal.
I also agree that this degree of content may be transitory.
>>> Yes, HD can do that — but it differs fundamentally from satellite radio in that it is ad-supported, doesn’t provide a choice of 100 channels, is not nationwide, and therefore does not deliver something remotely similar to sat radio. While it is true that HD is digital, it really is no different from terrestrial in these other important respects.
Ad-supported vs pay-for-delivery is a moot point. Regarding your nationwide stipulation, cell phones are available anywhere, free radio is available anywhere, ipods are available anywhere, slacker portable will be available anywhere, and this new ICO MIM thing looks interesting and is direct competition with sat rad. There is always some degree of competition.
All in all, it comes down to a few judgement calls:
Does sat rad receive enough competition in all markets?
How broad is the market in consideration?
I am comfortable with the amount of competition because of new media/free radio/ipods/otherwise. The perfect question to ask is why do only 4% of people own sat rad if it is so much better than all the other service they get? Why do people leave sat rad or not renew their service after trials?
Assuming they merge:
-Siri/XM will force the competition to be better and offer better service
-They will offer better service themselves
Have a good weekend. I will check back Monday.
>>> Slacker, internet radio, ipods, HD radio all did not exist. These are all significant developments.
The iPod is a significant development, but it is in a totally different business that isn’t even marginally related to that of sat radio; if we were discussing the iPod’s effect on CD sales, it would be reasonable to go there; iPod’s after all are a substitute for CDs. The iPod lacks the basic attributes of sat radio —
– Real-time capability
– No-hassle broadcast versus user-selected playlists
– Content must be purchased and downloaded
These are fundamental differences that definitively mean an iPod cannot be a substitute for sat radio.
There are lots of problems with Internet radio as a substitute — most notably, there is no ubiquitous reception in your car and there is no business model, meaning Internet radio could disappear overnight should RIAA begin collecting the money it is entitled to. Until these essential elements are resolved, it would be difficult to reasonably classify Internet radio as a substitute.
Slacker has some of the same problems — no availability of real time broadcast means you can’t do news or sports programming, and that pretty much slams the door.
The point is that all these competitors have one thing in common: They cannot deliver the important basic attributes of satellite radio. They each fail on one or more key elements that define satellite radio.
>>>> How broad is the market in consideration?
Well, this is the ONLY real question. XM and SIRI are asking for a total redefinition of market breadth, one that is inconsistent with all prior antitrust law. And they may get it; but they clearly should not if one analyzes the situation rationally.
>>> -They will offer better service themselves
I find this to be a ridiculous assertion. I have just not seen evidence that ANYONE or ANY COMPANY provides better service when they don’t have a direct competitor challenging them to do better.
Millions of i-pods have sold since inception. These people used to listen to radio, but now listen to their iPods. To state that an iPod is not a substitute for radio is to assume that iPod users were not listening to anything prior. We all know this is not the case.
Yes, the business models differ, and the method of delivery differs, but that does not stop the fact that if you are listening to an iPod you are not listening to SDARS, terrestrial, etc.
The real time capability of broadcasting really only comes into play with news and sports. Music is music. In point of fact, when Sirius or XM play music it is not live.
Failure to recognize that all of these various products are indeed competing with each other would be tantamount to failing.
Radio recognizes this, and are trying to compete Jack FM is “like your iPod on shuffle”.
A consumer can go out now and buy TurboTax and do their own taxes, or they can visit a CPA. The businesses differ, but they are both after the same consumers. A CPA office that ignores the existence of TurboTax as a competitor is missing the boat. Thus, CPA’s find ways to highlight services they can deliver that TurboTax can not. Turbotax is available on a national basis. Most CPA’s are in a local market. A CPA can give you specific tax advice, turbo tax is far more general. A CPA will take your call to answer questions, turbotax lacks this personal touch. A CPA can help you plan for next year, Turbotax is lacking in this area. The businesses indeed differ, and in many ways the differences are substantial, but make no mistake, TurboTax is indeed a viable substitute for a CPA.
Personally, we use and license Lacerte. A professional software for tax preparers.
>>>>>These people used to listen to radio, but now listen to their iPods. To state that an iPod is not a substitute for radio is to assume that iPod users were not listening to anything prior.
This is, of course, your speculation, which reaches an apparently incorrect conclusion. According to Arbitron, in a study done in January, 2007, fewer than 1 in 10 respondents reported listening to less radio as a result of their iPods/mp3 players. Less than 10%. This statistic, taken alone, shows that real people do not consider an iPod as a substitute for radio.
iPod listeners still listen to the radio. What they no longer listen to is CDs. CD sales are down sharply coincidentally with the rise of iPods and mp3 devices.
>>> but that does not stop the fact that if you are listening to an iPod you are not listening to SDARS, terrestrial, etc.
While your statement is correct, it has nothing, whatsoever, to do with the issue at hand — i.e., whether it is a “substitute”. While you are eating at McDonalds you aren’t eating at an expensive restaurant, but nobody in his right mind would conclude they are substitutes for one another in an antitrust context.
>>> The real time capability of broadcasting really only comes into play with news and sports.
This is mostly correct, but it is what it is — XM and SIRI have invested substantial money in being able to deliver real time news and sports content (in fact, they spend hundreds of millions to have FNC and CNN, and nearly a billion dollars over about 8 years for NFL and MLB games, plus substantial money for NCAA games). To marginalize the importance of this issue is to not comprehend the business sat radio is in.
So is the claim that “music is music”. There is a vast difference between the music available on terrestrial radio versus XM/SIRI — both in the ad-free nature of it, and in XM’s case, the absolute character of the music programming is substantially different from that on FM.
>>> A consumer can go out now and buy TurboTax and do their own taxes, or they can visit a CPA. The businesses differ, but they are both after the same consumers.
You just made my point for me. Sure, they are both after the same consumers, but do you think for a minute that Turbotax is a “substitute”, within the meaning of antitrust law, for a CPA? That would be just as absurd as the XM/SIRI vs. terrestrial vs. iPod notion. Absolutely ridiculous.
The argument is astonishing — that combining the only two players in an industry is not anticompetitive. It is, in fact, laughable, by anyone who understands the issues. Mel K. is a fantastic salesman and he has done a hell of a sales job on this deal. He clearly stated his desire to form a monopoly, and it is entirely possible he could be successful in doing so.
>>> Personally, we use and license Lacerte. A professional software for tax preparers.
That is a bizarre choice for someone who is not in the tax preparation business. It is an okay product (although overpriced) but most amateurs would do better with software that targets their expertise. The last firm in which I was a partner used it and I felt we were getting ripped off then; it is an even worse ripoff today at $3,000 with a single state for 1040 product.
1. Arbitron has produced several studies which clearly demonstrate the substitutionality between platforms. The fact that consumers cross over between SDARS, IPods and terrestrial radio is clear indication that these services all compete.
http://www.arbitron.com/downlo.....ct_RFP.pdf
http://www.arbitron.com/downlo....._study.pdf
http://www.washingtonpost.com/.....01065.html
http://vocuspr.vocus.com/Vocus.....Cache=True
2. Perhaps the best example of substitutions for SDARS rests with a 50% take rate in the OEM channel. These people are not crossing between SDARS services, but rather finding something else aside from SDARS that meets their needs.
3. Using Lacerte for taxes would be a bizare choice for someone not connected to the business. Your prices for a single state is a bit odd. Federal and one state is a bit below $3,000. You can always rep-access any additional states. A firm of any reasonable size easily covers the software costs. Other choices exist, but most have many bugs, poor customer service, and cause more problem than they are worth.
>> Arbitron has produced several studies which clearly demonstrate the substitutionality between platforms.
The links you cited certainly don’t. Nothing in either of these documents is remotely suggestive of what you claimed. The more pertinent of the two, which was a survey conducted a year more recently (in ’07 vs. ’06) is directly at-odds with your claim. The ’07 totally supports my view. Truly significant points (quotes):
a) iPod/Portable MP3 player ownership continues to rise. Thirty percent report owning either
an iPod or other portable MP3 player, which is up from 22 percent in 2006. More than half
(54 percent) of those age 12-17 own a digital audio player.
b) Fewer than one in ten report less over-the-air radio listening specifically due to time spentwith their iPod/portable MP3 player.
c) The majority of the “digital radio” audience predicts they will continue listening the same
amount to AM/FM radio. Seventy-nine percent said they expect to listen to AM/FM radio as
much as they do now despite increasing advancements in technology. The same holds true for online radio listeners and those who have tried audio podcasting. Satellite radio subscribers showed slightly less dedication to traditional broadcasting, with 70 percent saying they plan to continue listening to the same amount of AM/FM radio.
d) Contrary to commonly held beliefs, people who listen to digital radio platforms do not
spend less time listening to AM/FM radio.
e) iPod/Portable MP3 player usage has the greatest impact on over-the-air radio listening at home. Among those who report spending less time listening to over-the-air radio due to time
spent with their iPod/portable MP3 player, nearly two-thirds (65 percent) report less radio
listening specifically at home; nearly half are listening less in the car (49 percent). [It is significant that this is basically limited to one demo group, the 18-24s].
I strongly recommend you read the more recent report, as it flatly refutes your point of view.
http://www.arbitron.com/downlo.....y_2007.pdf
As to Lacerte, whatever. It is an okay product, but not targeted to those who aren’t in the tax return preparation business. If you are suddenly doing taxes, go for it — having done it for more than 15 years, I can attest to it being the most boring occupation in existence, with or without Lacerte 😉
My point of view is:
1. The competitive landscape is robust
2. That people find viable substiutes between terrestrial radio, mp3 players, satellite radio, and intermnet radio. othe new technologies such as cell based service and items such as Slacker add to that competitive landscape.
3. Satellite radio is radio delivered via satellite on a national basis. Rush Limbaugh is not on satellite, but is broadcast on a national basis. Sean Hannity is brodcast on a national basis on terrestrial radio, satellite radio, terrestrial television, and satellite television.
4. Surveys are interesting in that the results can differ so much. This Jacobs Media study says listening is down.
http://vocuspr.vocus.com/Vocus.....Cache=True
5. The Bedroom study by Jacobs Media gives some insight into what people are doing and how they are getting their audio entertainment.
http://www.jacobsmedia.com/sum.....edroom.asp
6. This survey shows desireable features in someones next car. Not the strength of terrestrial radio as well as CD players.
http://www.jacobsmedia.com/art.....dradio.asp
7. In this study half said that they connect their MP3 player in their primary car.
http://www.jacobsmedia.com/art....._ipods.asp
Note this quote, “Mp3 player owners spend more time listening to terrestrial radio than their iPod-like devices, but technology is taking a bite. More than a third (36%) still mostly or exclusively listen to radio, but one-fourth (24%) now spend the bulk of their time with their mp3 players. And a plurality – 41% – divide their listening about equally between terrestrial radio and their iPod-type device.”
That 24% that listen to an MP3 player for the bulk of the time was not possible a few years back.
The direct point is that there is indeed substitutionality between the various services and products, and more importantly, they all compete.
By the way. I do not do tax returns.
Radio Trends According to Arbitron
http://wargod.arbitron.com/scr.....rends2.asp
>>> That 24% that listen to an MP3 player for the bulk of the time was not possible a few years back.
No, they listened to CDs. The iPod has killed the CD business. But according to Arbitron, it doesn’t seem to have that much to with radio listening for most age demos.
>>> The direct point is that there is indeed substitutionality between the various services and products, and more importantly, they all compete.
The most misunderstood concept surrounding the merger is the competition vs. substitutionality issue. There is a difference between “competing” and “substitutionality”.
Apples “compete” with oranges, but they are not substitutes for one another.
Once again….What does someone who leaves satellite radio do? Do they listen to nothing? Between Sirius and XM 4,000,000 subscribers left these services in 2007. They obviously had a substitute of some nature, and we all know what that substitute is.
Do you guys have any idea how much easier it would be to have this discussion in the forums? Comment fields in blogs are for just that…comments…not full blown discussions.
Feel free to do as you wish but this would be so much easier for you guys keep track of and for everyone else to read if it were done in the forums. Just trying to help you guys out.
>>>> Once again….What does someone who leaves satellite radio do? Do they listen to nothing? … They obviously had a substitute of some nature …
The problem with this statement is a definitional one; “substitute”, for antitrust purposes, doesn’t merely mean “any alternative”, or even “some alternative”. They may be listening to an iPod, they may be listening terrestrial, or merely road noise. And while in the common vernacular, that may mean they found a “substitute”, this is not what is meant by “substitute” as it pertains to antitrust law.
Take the aforementioned Staples case, in which a merger was denied. Staples sold the very same office products that were available at Walmart. Yet, those at Walmart were not considered a “substitute” — because the “shopping experience” for consumable office supplies at Walmart is different from the “shopping experience” at Staples.
“Substitute” has a specific meaning in the context we’re using it, and that meaning is not just “any alternative”. By the “any alternative” definition, there would be practically no circumstance that could possibly lead to anticompetitive activity (since there is always SOME alternative for every product, although it may be highly undesirable).
It is strange to me that you, one of the foremost proponents of the virtues of satellite radio, would find that a CD or an iPod or terrestrial would form a suitable substitute. For me, there is no way I would go back to terrestrial. And while I love my iPods, there are many times that having 20K tracks of prerecorded music is simply not what I want.
My conclusions about what is substitutable is not material. What is material is waht happens in the marketplace. The issue of substitution ties directly to several factors, and one of those factors is pricing. If satellite radio went up in price would consumers leave for another option?
This is demonstrated in the OEM channel. When aconsumer is asked to foot the bill rather than the OEM, the drop rate is 50%. Half of the people find substitutes via another medium, and to argue that they are opting for road noise is something everyone knows is not happening. According to Arbitron, the vast majority of Americans listen to radio.
Staples is an office supply superstore with people dedicated to assisting your needs in a specfic segment of retail (office supplies). Wal Mart is a General merchandise store that does not have people dedicated to understanding office supplies.
Radio is radio. Rush’s Tom Sawyer is the same on FM, Satellite, HD, CD, and MP3. In fact, live music on any of these mediums is the exception rather than the rule. In point of fact, when you hear a song, 99% of the time it is a recording of the song you are hearing.
To illustrate this, I will list 10 songs. Tell me whether they were delivered from AM, FM, HD, Satellite, Internet, Cell Phone, or MP3 Player.
1. Flo Rita
2. No One
3. Apolgize
4. Kiss Kiss
5. Clusy
6. With You
7. Paralyzer
8. Bubbly
9. Tattoo
10. Take You There
You can not tell me where these were played because the fact of the matter is that it could have been any one of the mediums in the audio entertainment landscape.
You say there is no substitute for satellite, and for you that may be the case. For many, it is not the case. Personally I tend to listen to satellite the bulk of the time. I listen to songs that I have saved on my stiletto and S50 as well. Today a half hour drive was all saved songs on the Stiletto. Friday afternoon I listened to Sports Radio WEEI to get the latest and greatest local coverage of the Patriots.
Additionally, the landscape of today is not the only factor. The DOJ gives full consideration to what the landscape will look like 2 and 3 years from now.
>>>>>>>>Staples is an office supply superstore with people dedicated to assisting your needs in a specfic segment of retail (office supplies). Wal Mart is a General merchandise store that does not have people dedicated to understanding office supplies.
Exactly.
Satellite radio is a place where you can get 70 channels of commercial free music, no matter where in the country you are or what time of day it is. Terrestrial radio is a place where you cannot get commercial-free anything, and the channels you can get are available only on a localized basis — in most places in the country, you cannot get a single channel of classical music, blues, showtunes, Folk, or any number of other products. And if you could, they would be loaded with commercials.
It is a different “shopping experience”.
Frontmed…
The national scale matters little to a consumer. Most consumers spend the bulk of their time within the market served by terrestrial stations. If you are in Mississippi, do you really care what is on the radio in Vermont?
Commercials is how the consumer pays for terrestrial radio. They are paying with their time rather than dollars. Satellite does away with commercials. The consumer is paying with dollars rather than time.
You state, “in most places in the country, you cannot get a single channel of classical music, blues, showtunes, Folk, or any number of other products. And if you could, they would be loaded with commercials.”
Anything to support this? According to the source you like to site so frequently, Arbitron, most radio listening takes place in the home or office. Many terrestrial radio stations offer their content on line on a national basis. There are hundreds if not thousands of on line services to get your music.
Secondly, If for some odd reason a location did not have classical music before, what did people do? They found a substitute in CD’s, iPods, etc.
Format data is available here
http://www.insideradio.com/for.....counts.asp
The fact of the matter is that there is substitutionality between audio entertainment mediums. There is also competition. Satellite Radio makes up 4% of the population. No matter what you say, it does not change these basic facts.
>>>>>The national scale matters little to a consumer.
What evidence do you have that it “matters little” to a consumer? The only thing I’ve ever seen on it was in an old investor presentation at XM, several years ago, where it was cited in a survey as a primary benefit of sat radio.
>>>> Anything to support this?
It is common knowledge, I assumed you would know this.
But here you go with the, “Oh, but there’s always ‘online’ classical radio”. This absolutely proves my point. There is no suitable alternative for the six classical stations offered between XM and Sirius, and so your response is, “Oh, but you can buy CDs” or whatever.
It is amazing to me that the pro-merger case can be ripped to shreds so easily, yet so many of you still support it — and in fact, the DOJ may even support it.
There is no way such an obviously anticompetitive merger of any two companies would have been permitted 10 years ago. But for whatever reason, the DOJ’s antitrust department has just collapsed in the last several years.
Frontmed.
Evidence about national footprint meaning little to a consumer???? Ask yourself if you care what is playing on the radio in Vermont at this very moment? All you care about is what is playing in YOUR LOCATION.
In your own mind you have your case. The fact that you and a few others are standing alone on an island is fine. The problem starts when you fail to recognize the minority you are in.
FACT – Satellite radio competes with terrestrial, internet radiuo, ipods, and newer capable cell phones.
FACT – Consumers find viable substitutes
FACT – Churn from one company is not signing up for the other, but rather finding an alternative
FACT – Satellite Radio makes up 4% of the audio entertainment listening audience.
FACT – The musical content between the various mediums is nearly identical.
FACT – A National footprint matter little to the consumer. A consumer is only interested in what is on in their location
FACT – Terrestrial radio recognizes that they are in competition with satellite radio
FACT – A market that makes up 4% of the landscape having a merger does not represent anti-competitive environment.
FACT – The landscape that existed when SDARS began is vastly different today, and will be expoentially different in 2 more years.
I can see Frontmed’s points but I really think he is defining the market as a single product because the two products are exactly identical and for that reason only.
I go back to my iphone example because that’s one device that has features that nobody else has on a single device but it doesn’t make it a monopoly because people could use a cellphone and a mp3/video player to offer the exact same services. In SDARS, you could use a radio + ipod + internet to offer the same services, and it is not at all unreasonable.
I think he is led towards defining the market as “satellite radio only” because the products are similar.
His argument about commercials on the other hand is completely irrelevant because of Tyler’s point about method of payment – time vs. commercials. Satellite radio could do commercials as well, it doesn’t change anything with regards to this discussion.
He states that the pro argument can be ripped to shreds but this is the litmus test for everything:
1. If sat rad merges will competition increase? Yes, because internet radio, HD radio, terrestrial, slacker, GPS, etc, etc will offer better products.
2. Will consumers pay approximately the same or less for the same or similar product?
Yes, they will have more choice and the option to keep the same service at the smae price when people are currently talking about raising prices.
3. Will SDARS service be better?
Yes, no need for two services. More content available.
4. Will competitor service be better?
Yes. iTunes, HD radio, internet radio, etc will have to offer the same value proposition as sat rad if they decide to offer more content or a cheaper product. They will have to lower prices or offer more for the same price (or perhaps less commercials in the case of normal radio).
5. Is there any disadvantages for the consumer?
Frontmed, perhaps you can answer this without saying using “no competition” because you already agreed that SDARS competes with sat rad.
6. Are there substitutes?
Yes, normal radio is available in all markets. Perhaps if they want to be more competitive they could offer more variety/channels to more effectively compete. It is there choice to not compete with the variety of sat rad. Substitutes are demonstarted by churn, etc, as discussed before.
Apologies for all my spelling mistakes…
>>> All you care about is what is playing in YOUR LOCATION.
That’s not the issue. The national “footprint” means that where ever I am, I can get the stations I like and that I’m familiar with, I don’t have to constantly be re-tuning to get good reception, and I know I’m going to have the content I know and expect. This isn’t a major factor for everyone, but it is an important distinguishing characteristic for many. That it isn’t for you, well, that’s you.
I recommend you google “satellite radio advantages” and read the first 10 or so articles. Practically every article refers to the “national footprint” in some way or another. That it isn’t an issue for YOU is immaterial; most people apparently find it to be a significant feature.
whenever you start listing “facts”, it pays to watch out. But I would add, several of the items you list are “facts” are facts, but they just aren’t relevant facts.
For example, it is true that sat radio comprises only 4-5% of all radio listening, but this is actually not relevant to the discussion, since terrestrial radio cannot reasonably be considered to be in the same business as satellite radio.
You tell us consumers find viable substitutes, but these are not “substitutes” within the meaning of well-defined antitrust law — they are more aptly classified as “alternatives” — which may include listening to absolutely nothing while driving (I know several people who actually prefer this).
You say a “national footprint matters little” to the consumer; this, however, is not a fact as can be proven easily by reading what most people consider to be advantages of satellite radio.
You just don’t understand the issues. That people dropping XM don’t sign up for Sirius is meaningless in the antitrust debate. They simply choose not to buy a particular type of product. It is faulty logic — if I choose not to buy a Ford SUV, can you infer from that that I chose to buy a new Harley instead? Of course not. If I choose not to buy satellite radio, it means one thing: I chose not to buy satellite radio. Duh.
You need to be careful what you call a “fact” — just because you think it doesn’t make it a fact.
Sirius Int —
>>> 1. If sat rad merges will competition increase? Yes, because internet radio, HD radio, terrestrial, slacker, GPS, etc, etc will offer better products.
I appreciate your opinion, but it is not consistent with what we know to be the history of competition — that cutting the competition roughly in half improves the service.
>>> 2. Will consumers pay approximately the same or less for the same or similar product?
Yes, they will have more choice and the option to keep the same service at the smae price when people are currently talking about raising prices.
Again, this just can’t be shown to be true. Once the monopoly is created, Mel is free to raise prices as he determines is necessary. Do other competing services restrict his ability? Probably — but price elasticity is indiscrete and thus, it is a matter of degree.
>>> 3. Will SDARS service be better? Yes, no need for two services. More content available.
There is no evidence, whatsoever, to support this claim. In fact, by all accounts, LESS content will be available, not more.
>>> 4. Will competitor service be better?
Yes. iTunes, HD radio, internet radio, etc will have to offer the same value proposition as sat rad if they decide to offer more content or a cheaper product. They will have to lower prices or offer more for the same price (or perhaps less commercials in the case of normal radio).
Sorry, but this is nonsense. As was said, it is only 4% of the broader market — the tail won’t wag the dog.
>>> 5. Is there any disadvantages for the consumer? Frontmed, perhaps you can answer this without saying using “no competition” because you already agreed that SDARS competes with sat rad.
Sure there are disadvantages. First and foremost, we will lose roughly half of the currently available 140 combined music channels. More importantly, we will have ALL of satellite radio under the control of one entity, which obviously results in greatly decreased diversity (this is, after all, the principal objection to a single owner controlling entire terrestrial markets). Another HUGE disadvantage is the absolute waste of the scarcest of resources — spectrum — which will, for a significant time after the merger, be used to broadcast substantially identical programming.
>>> 6. Are there substitutes?
Yes, normal radio is available in all markets. Perhaps if they want to be more competitive they could offer more variety/channels to more effectively compete. It is there choice to not compete with the variety of sat rad. Substitutes are demonstarted by churn, etc, as discussed before.
I’ve explained that these are not substitutes within the meaning of antitrust law and that in fact, XM/SIRI are trying to get years of antitrust law thrown out with this merger. And they may succeed.
Mel has done a great job of selling this concept; it is a fairly easy sell, to be honest, because MOST people who are not subscribers simply don’t understand the differences between sat radio and other forms of in-vehicle entertainment.
I appreciate your list of opinions on the subject, and you’re entitled to them. But it is important not to conflate opinions with facts (as Dobie has done above). When one looks at the facts underlying the proposition, it becomes very difficult to support the merger on antitrust grounds alone. Combine that with sat radio’s acceptance of the licenses conditioned upon no merger (ever), and the anti-merger position is overwhelmingly, factually correct.
That is not to say it won’t be allowed to go forward, because there are definitely politics involved.
1. As I said earlier, most americans are within range of their terrestrial radio stations for the vast majority of their time. There is no need to retune if you never leave your market. Sure, you may leave your market to go to Disney, but are you really listening to radio while riding space mountain?
2. Perception of a significant feature and reality differ. Most Americans say they want a CD player in their car, biut according to you, CD’s do not matter any more. I rarely listen to CD’s anymore, but I am not ready to buy a car without a CD player. Again, do you care what is on the radio in Vermont right now? You have yet to answer that simple question. The fact is that it does not matter.
3. The “well defined antitrust law” illustrates that these other audio mediums are substitutes. Your “selective glimpse” at antitrust law from an anti merger perspective is countered with many arguments from the other side. At the end of the day, it is the DOJ that will make the decision.
4. The facts are all there for you or anyone to see. Because your reality does not match that of 95% of the people will lead you to the conclusion that these facts are not facts. The facts I listed are just that….Facts
5. Your argument that people who opt not to buy satellite radio are listening to road noise is laughable, and demonstrates your jaded view of the issue. People are listening to something. On one hand you love to state that regular radio listening is not declining, but on the other you want to say they are listening to road noise.
Virtually every point that you raise is easily refuted. You are in a huge minority regarding the merger, and the reasons are that yours, as well as the NAB’s arguments simply do not hold water.
Tell Mr. Rehr I said hello.
>>>I appreciate your opinion, but it is not consistent with what we know to be the history of competition — that cutting the competition roughly in half improves the service.
Reducing the competiton by 2% of the broader market is not half (~50% of 4%).
>>> Once the monopoly is created, Mel is free to raise prices as he determines is necessary. Do other competing services restrict his ability? Probably — but price elasticity is indiscrete and thus, it is a matter of degree.
Mel already has his price offerings out. Show me one instance where you receive less content for more money.
>>> Sorry, but this is nonsense. As was said, it is only 4% of the broader market.
4% goes to show that people find a better value proposition elsewhere.
>>>First and foremost, we will lose roughly half of the currently available 140 combined music channels. Another HUGE disadvantage is the absolute waste of the scarcest of resources — spectrum — which will, for a significant time after the merger, be used to broadcast substantially identical programming.
Well currently, they are being wasted broadcasting almost the same content on at many of the music stations.
you’re back to your pitiful, weak arguments, so I’ll go away and leave you to it. There is no end, but with each iteration your positions get weaker.
I will say that anytime you want to debate the antitrust issue I will be glad to explain it to you because you certainly don’t have a clue what the issues are.
I would strongly recommend you read the comments submitted by the Antitrust Institute, because I believe they are probably the most forthright and most informed of any comments on the merger.
>>> The facts I listed are just that
I don’t think any objective observer would view them that way. I’m sure followers of this blog would support your position — it is your blog and is mostly monitored by Siriots (who, in large part, support the merger — either because Mel wants it, or because they [mistakenly] believe they will get improved content as a result of it. XM listeners tend to be happy with what they’re getting, and largely are opposed to the merger, IMO.
Also regarding this gem:
>>> There is no evidence, whatsoever, to support this claim. In fact, by all accounts, LESS content will be available, not more.
More HIGH VALUE (MLB, NFL, NHL, Stern Oprah, O&A, NASCAR…) content will be available under the same service umbrealla for 19.95 instead of having 2 services for 15 bucks a piece. As a listener, not having 2 top 40 stations, 2 pop, etc is not a huge loss for me.
As a listener of both, when they say that they will pick the best stations of both, a 33% reduction in cost (not to mention having two receivers which is ridiculous) is a great propostion even if some of the stations that they decide are the best (ie, best top 40) are not my favorite of the two.
Frontmed
Can you point me to any study that shows that Sirius subscribers are in favor of the merger while XM subscribers are against it? This seems completely ridiculous to me.
I agree with some of your points but, your personal attacks on people substantially weaken/lessen your argument.
>>>> More HIGH VALUE (MLB, NFL, NHL, Stern Oprah, O&A, NASCAR…) content will be available under the same service umbrealla for 19.95 instead of having 2 services for 15 bucks a piece. As a listener, not having 2 top 40 stations, 2 pop, etc is not a huge loss for me.
I’m unclear on just how you think this is going to happen. The merger does NOT give XM the right to broadcast NASCAR races or NFL games, nor does it give Sirius the right to broadcast NHL or MLB games. There is no reason NFL or MLB would agree to allow this content to be broadcast on both services without substantial additional payments, money the combined company can ill-afford to spend.
One can envision various contortions of the current content situation; however, any major change, other than a “best of” arrangement, requires the creation of a dual-mode receiver, which Mel claimed under oath would cost $700 and thus cannot be done profitably, which means it isn’t going to happen (unless he lied under oath).
If any of what we’ve been told is accurate, the two services will remain largely independent, from a non-music content perspective, after the merger. If you are presuming there will be a dual-mode receiver, that is a pretty big leap from where we are today — if they can’t produce them cost effectively today, there is no reason to expect them to do so after the merger (it is my opinion we’ll never see a dual-mode receiver, or at least not in the next several years, due to the cost and the very small number of subscribers who would be willing to purchase subscriptions to both services). Music programming will likely be collapsed into a single set of about 70 music channels within a short period (perhaps 2-3 years).
>>> As a listener of both, when they say that they will pick the best stations of both, a 33% reduction in cost
There is no reason, whatsoever, to expect anything other than a near-total elimination of half of the music stations — which is likely to happen quickly (within the first couple of years). This, of course, frees up no bandwidth — it just reduces the in-house production budget (which isn’t that much). You are not going to end up with 6 classical channels, you will end up with 3. Combining the rock channels will be more difficult, but will be done, if more slowly. Peck has estimated that an amount equivalent to XM’s entire in-house production budget will be slashed within 2 years.
The important thing is that all the bull that is being promised about “more diversity” and “choice” — is out the window the day after merger approval unless FCC gets iron-clad a priori commitments.
I think the biggest point of confusion about the merger is that, somehow, overnight, you’re going to be able to receive XM/SIRI both on one receiver. Even if they decided to do it, it would be very far into the future; more likely, it just won’t happen. I have posted my rationale for this belief at orbitcast and won’t go back over it here. The second biggest point of confusion is on the related topic of bandwidth; the merger frees up zero bandwidth unless the companies’ “promises” to support legacy receivers into perpetuity are broken.
>>>> Can you point me to any study that shows that Sirius subscribers are in favor of the merger while XM subscribers are against it? This seems completely ridiculous to me.
I know of no studies either way on the subject; my remarks are based solely on responses to informal Internet polls. I will say the results, while not statistically important, were anecdotally overwhelming —
At orbitcast, of those who prefer XM, 7/27 support the merger, while of those who prefer Sirius, 15/16 support the merger.
At XM411, 11/65 who preferred XM support the merger, while 3/4 who preferred Sirius supported the merger.
I know — anecdotal, unscientific, and meaningless — but it is the best you can get right now without spending money…. But IMO, it does represent the overall feeling of those who are knowledgeable about the subject. Those who subscribe to one service or the other because it was in the car they bought, probably don’t care one way or the other as they have no awareness of the other service or what it all means anyway.