Satellite Radio Merger: The Beginning of the End?
Sirius and XM have finally joined forces, but is this good news for listeners?
November 19, 2008 by Richard M. Sherwin

I feel really, really bad both professionally and personally that satellite radio is going away. What? You say the merger will preserve the longest running alternative to the slowly dying, little choice over-commercialized terrestrial radio? I don’t think so!

No matter how this transition pans out, satellite radio will never be the same. Last week’s morphing of music and other radio content may do little to prevent the real fans of satellite radio from eventually walking away from the dial.

A few months ago, the Federal Communications Commission and other federal groups gave the final go-ahead to the merger of Sirius and XM Satellite- radio. They waxed poetic that these two companies may not survive the onslaught of other digital music/radio systems. Because of the new devices and the overall migration of radio and audio content to many other venues, this merger did not constitute a monopoly.

And realistically despite my use and admiration (along with 19 million others) of satellite radio, the alternatives including MP3 players, mobile phones with audio capabilities, HD Radio, Internet Radio and hybrid radio services like Rhapsody, Pandora, Last FM now offer plenty of choices that could be better and cheaper. And these alternatives could prove too much competition to make the merged companies a success. And eventually, the XM-Sirius combo may actually be forced to foreclose on more programming.

The Programming
In the merger, the smaller company Sirius wound–up owning the deal. In the last few weeks, many of the marketing and programming people were let go from XM radio…despite the fact they actually started this business. Even with Howard Stern and the NFL, Sirius never caught-up to XM’s subscriber total or unique programming.

Speaking of Stern, whose success almost saved Sirius, he will never earn enough advertising dollars to pay for his lucrative contract. While Stern denies it, don’t be surprised if his former home (CBS) reaches out to the shock jock. It’s not clear yet how many of the too-much-talk/not-enough-music programs will actually survive the merger. Officials from the company claim there will be a general toning down of the obnoxious DJs.

The music channels will fall along the lines of XM’s format - 40s, 50s, 60s, 70s, 80s and 90s. The new combined programming really doesn’t have a traditional folk music channel that would feature the likes of Joan Baez, Cheryl Wheeler or even John Gorka. I was told by Sirius that the Grateful Dead are folk music. There appears to be no difference between the oldies channel and the 60s channel. It’s apparent the classical channels are programmed by a computer with a limited memory. There ARE other composers beyond Bach and Beethoven.

Sources tell me that many of the programmers of other genres, such as rock and pop, were let go. That means different interpretations, fresh and new recordings, and the reason satellite radio was great are also out the door.

What about Subscribers?
Both system’s feeble attempts to convert each other’s listeners are being handled so poorly, subscribers are left in the cold. Recently several consumer surveys and focus groups conducted by private and public entities revealed that people are not signing up for either Sirius or XM when their renewals are due. This despite the fact they feel the $10-$12 monthly fee is fair. Sales through new car purchases are also expected to suffer mightily as the recession slows the auto industry in general.

So consequently, it’s not just one naysayer’s opinion that’s triggering a revolt in the subscriber base. I am and always will be a huge supporter of satellite radio, but myself and other radio authorities are now seeing and hearing some things from these services and their respective business and content practices that are alarming.

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Richard M. Sherwin - Contributing Writer
Richard Sherwin is a former syndicated technology columnist and TV/Radio analyst, who has also been a marketing executive with IBM, Philips, NBC and a chief advisor to several manufacturers and service providers.

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