Just as it seems that satellite radio is becoming a contender in
the radio industry, there are talks of a merger between the two
satellite radio giants, XM and Sirius, because of the fact that
both are losing money. Combined, XM and Sirius satellite radio
companies lost 1.5 billion dollars in 2005 alone. Neither
company has ever turned a true profit. Much of the money lost
was to attract talent and exclusive programming such as Sirius
radio's acquisition of legendary radio "shock jock" personality
Howard Stern and XM's deal with Major League Baseball for
full-game broadcasting rights. Even so, these acquisitions have
thus far failed to draw enough listeners to put each of them
into the black.
Though the talks of a merger were hurriedly dismissed early on,
both companies are more forthright with their intentions now. As
it stands, high-level merger talks are becoming more serious and
the companies have already outlined some of the major facets of
a possible merger. Both companies will retain 50% of the rights
to the new company with XM gaining 4.6 shares of stock to every
1 share that Sirius receives. Both respective CEOs will retain
their positions and their titles as such, sharing the load of
the new mammoth satellite radio company.
However, it wasn't long before many critics began crying foul
about the potential merger. For instance, a merger would mean a
monopoly of the satellite radio market, with no other
competitors able to effectively enter without being beaten by
the combined forces of the two industry pioneers. Even though it
is an industry that was not in place before the two companies
came along, a merger would almost assuredly bring about
anti-trust suits galore. Furthermore, if the merger did take
place and they were able to stem off such legal proceedings or
win the ones that did come about, many critics point to other,
potentially more damaging mergers that would cry foul if they
were met with government intervention. If ClearChannel, the
terrestrial radio goliath were able to gobble up ever radio
station that they wanted, a monopoly would occur there. And what
would happen if ABC, CBS, and NBC were allowed to merge? While
these scenarios are, as of right now, speculation, similar
consequences could, and most likely would happen if the merger
would be allowed to take place.
But what about the consumer? Would the average satellite radio
subscriber benefit from the joined forces of the two satellite
radio companies? Perhaps, but perhaps not. On one hand, the
combined resources would enable a broader reach and increased
programming for the price of just one subscription, however
being that the company had a monopoly on their services, they
would be able to charge just about anything they wanted.
However, to be fair, the market would still decide on whether or
not the new company would gouge prices, as satellite radio is
currently in a heated war with the emerging digital radio format
brought on by terrestrial radio backers.
สมัครสมาชิก:
ส่งความคิดเห็น (Atom)
ไม่มีความคิดเห็น:
แสดงความคิดเห็น