The National Association of Broadcasters has had a meeting with the FCC. Interestingly, the positions of the NAB, when thought about from a business perspective seem odd.
#1 The NAB states that the merger would harm consumers by removing incentives that XM and Sirius currently have to offer competitive rates.
- If SDARS became more expensive would terrestrial radio benefit because less people would be listening to satellite radio?
- If SDARS already is only able to keep half of those that try the service at current prices, what percentage would that change to with higher prices?
#2 The NAB states that satellite radio would lose the incentive to provide unique and diverse programming.
- If SDARS were to stop providing unique and diverse programming, wouldn't that benefit terrestrial radio?
- If the programming suffers, wouldn't it become more difficult to raise prices as the NAB outlines in point #1?
- Satellite Radio already has diverse programming, and has committed to providing more.
#3 The NAB states that SDARS would lose the incentive to produce innovative equipment.
- SDARS still has to compete with terrestrial radio, I-Pods, Internet radio, etc. If the equipment is tired and old, consumers will not want it. How far would the NAB like the innovation to go? They could develop a receiver that allows individualized targeted local advertising, but there is something that is not allowing that innovation to happen already.
#4 The NAB is concerned over a spectrum monopoly.
- This point is true. One company would have control over the existing spectrum allocated for SDARS. One possible solution is that the legislature could carve out another 25 MHz of spectrum as was initially intended. Proposed channels that the merged company has no editorial control over is another possible solution. The fact of the matter is that the consumer has a wide variety of choices now. A number of years ago these choices did not exist.
#5 The NAB expresses concern that Sirius and XM are being rewarded for refusing to make an interoperable device commercially available.
- The switching between services has been minimal, and realistically speaking would have been minimal even with an interoperable device. Switching a subscription service is a bit more complex than changing a radio channel. If a customer has already subscribed and paid for 1 service, why would they switch back and forth at a greater expense? Activation fees, unused service, reactivation, etc. It simply is not something consumers do.
- Additionally, the compliance with the FCC mandate is in the FCC's realm. Sirius and XM have stated that they have complied. The FCC has not agreed or disagreed. Thus we have the status quo.
#6 The NAB states that past behavior of Sirius and XM would make any new attempts by the FCC to make SDARS consumer friendly would be futile.
- Anyone can cast stones. Terrestrial has their payola scandals, SDARS has an FM modulator issue.
Some will say that I am overly critical of the NAB and overly friendly to SDARS. Perhaps this is the case. I feel that the NAB is trying a bit to play both sides of the fence. I feel SDARS is seeking out any advantage they can get as well. As a fan of SDARS, I would like to see the merger happen. I do not see prices going through the roof, and I do not see these companies refusing to innovate. I simply see that SDARS ill become more viable, and will bring terrestrial radio up to a different standard than exists today.
Position - Long Sirius, XM.