According to the New York Times and Reuters, XM and Sirius, the two satellite radio carriers in the US have reached a deal in which they would merge in a $4.6bn stock transaction. The mainstream media has thus far analyzed the potential merger in terms of dollars and cents, and what this means for the market. I’d like to have a look at what this transaction might mean for programming, consumer choice, and multiplicity of voices.
Let’s take a very specific genre of programming that’s relevant from a civic-involvement perspective: news and public affairs. On my XM dial, I have these options for news programming:
- Fox News
- CNN Headline News
- ABC News and Talk
- CNN EspaÃ±ol
- BBC World Service
- XM Public Radio
Now, that looks for the most part like a typical basic cable package, with the exception of BBC and XM Public Radio, which is an interesting case by itself: It’s XM’s answer to Sirius’ deal with NPR, mostly comprised of programming from PRI and American Public Media. Let’s look at that further. Is it really worth it for Sirius and XM to continue their deals with PRI, NPR, and APM simultaneously if the deal goes through? If I had to speculate, I’d say ‘no’; XMSirius combined has enough programming to fill a single channel of ‘Public Radio’ for 24 hours per day. One or other will go away, and I’d say that’s the content from PRI and APM: XMSirius will take the brand-recognition of NPR any day. Depending on the terms of that deal with NPR, this could mean the total loss of PRI and APM programming from satellite radio.
Of course, this is speculative, and predicated on the assumption that the merger actually occurs.
Let’s examine some of the pro-merger reasoning given in the New York Times article, which is mostly summed up in this paragraph:
Mr. Parsons said that unlike EchoStar and DirecTV, whose only rival was cable television, the satellite radio companies have a very small audience compared with the ways people get music, information and entertainment in audio formats, including iPods and the Internet.
So, basically, XM and Sirius shouldn’t be evaluated under the same terms as the rejected EchoStar/DirecTV merger because they face competition from iPods and the Internet. In 2002, the FCC blocked that deal because it would “fly in the face of of three decades of communications policy that has sought ways to eliminate the need for regulation by fostering greater competition”, according to then-chairman Michael Powell. 2002 wasn’t that long ago. In 2002, the internet was home to vibrant streaming media, blogs, MP3 downloads, and so on. DVDs were the industry standard for consumer video. Even iPods were by then on the scene (in fact, they were up to their second generation at the time of the FCC decision). So, what’s really changed between the 2002 EchoStar decision, and this new Sirius/XM proposal? Not that much, really. If Sirius and XM are feeling competitive pressure from iPods, they should figure out how to compete with the external pressure, not use it as an excuse to create yet another media conglomerate wielding a monopoly.
Moreover, the argument that iPods (and presumably Digital Audio Players in general) compete directly with satellite radio is specious at best. I can’t listen to Major League Baseball live on my iPod, nor can I listen to Howard Stern’s show. I can’t get a traffic report, either, and my iPod doesn’t tell me about new music, but it does let me listen to my own music when I feel like it. The perpetual advantage to music radio–both terrestrial and satellite–has been the skill and knowledge of a talented DJ and Program Director to tell me about new music, and create a good playlist for me to listen to. If I’m driving in my car, or walking on the street, I can’t jump onto pandora.com and figure out what music I might like to listen to (as much as I’d like to)–I have to turn to the expertise of someone else, and all I really have access to is radio, including satellite radio. Given my musical preferences and limited tolerance for commercials, this is where XM has done very well for me in the music arena. If XM fails to exploit the advantages of its medium, that is no reason to allow it to change the face of the marketplace with a merger; it is reason for it to retool its programming strategy, its marketing, and invest in R&D that plays up its highly-mobile, nationally-available niche formatted programming.
When the FCC granted two entities satellite-radio operating licenses, they did so with the express intent that neither company should ever own the other’s license. Based on past precident and present circumstances, I see no reason to dissolve that arrangement.