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Sirius XM in Perspective
by Paul Resnikoff, Publisher Digital Music News, August 7, 2008
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The freshly-combined Sirius XM Radio shifts the radio landscape somewhat, though the broader impact on the music and media terrain will be modest.  The days of four TV channels and ten radio stations is over - consumers now have more options than they can possibly handle, and that makes it difficult for any one company to dominate.

Ultimately, that massive and super-competitive arena paved the way for a regulatory approval, despite nearly 18 months of waiting. And now that approvals have been granted, there are more winners than losers.

(1) Winners: XM Satellite Radio, Sirius Satellite Radio

Obviously... though both companies needed this merger to buy breathing room on their cost-heavy, profit-empty existences.  A merged entity offers the hope of generating enough subscribers and cost savings to create a profitable scorecard.  But both companies approached this merger from a position of weakness and survival, not from the perspective of an ambitious land-grab.

(2) Winners: Satellite Personalities

Whether Howard Stern, Opie & Anthony or Eminem, a combined dial means more subscribers and greater reach.  And in turn, more relevance for the personalities involved.

(3) Winners: Consumers and Music Fans

Sure, the dial gets more complicated, and so do the packages.  And it remains unclear what music programming approach will ultimately emerge.  But forget about choosing Howard or hockey; the NFL or Opie & Anthony.  Decisions are now more properly based on the possibilities, not missed opportunities.

Pricing becomes more complicated, and probably more expensive over the long-term, though consumers have plenty of options for entertainment outside of the satellite radio.  That includes a growing number of HD options, iPods, iPhones, and a myriad of streaming radio choices.  And healthy, open market competition makes gouging unwise.

(4) Loser: Terrestrial Radio

The National Association of Broadcasters (NAB) lobbied heavily against this merger for a reason.  The successful merger means better programming competition, longer satellite staying power, and continued inferiority of the current terrestrial dial - analog or HD.

(5) Winners: Automakers

In the short term, automakers will be forced to navigate a bumpy transition.  Every automobile in the lot carries either an XM- or Sirius-compatible receiver, and integrated solutions remain forthcoming.

But from a broader perspective, automakers have collectively made a serious commitment to the format, and the merger extends against a near-term burnout from either provider - and a resulting dud dashboard.

(6) Winner: Kevin Martin

History is the ultimate judge, and regulators are sometimes afraid of making a legacy-soiling mistake.  Perhaps that's why the approval took forever, and shorter decision windows are certainly needed.  But FCC chairman Kevin Martin and the Department of Justice properly contextualized satellite radio into a very broad, very competitive media terrain.

(7) Tough Call: Emerging & Catalog Artists

Satellite radio plays music that traditional stations wouldn't touch - even HD2 channels.  That goes for newer artists, and older songs that appeal to niche audiences.  More exposure is always good, but how do you get a newer - or otherwise obscure - song onto the dial?  And are enough people listening during the right five minutes, at least at current subscriber volumes?

(8) Does It Matter? Major Labels

A more powerful satellite radio gives majors a platform to promote their signings.  And major label promotional teams have traditionally excelled with bigger, consolidated radio outlets.  But how long will it take for satellite radio to scale to something truly massive?  And even if this does occur, labels currently have problems capitalizing on successful exposure campaigns.

(9) Who Cares: iPod, iPhone, Cash-Strapped Fans

Like to tune out, and tune into your iPod or iPhone?  A large percentage of consumers are discovering content online or through conventional radio, downloading through LimeWire, or ripping dusty CDs.... for free.  A bigger, badder satellite radio ultimately costs money, and that kills the deal for millions of music fans.  In the end, everyone is competing with free.

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Paul Resnikoff is the founder and publisher of Digital Music News (www.digitalmusicnews.com), a premier industry source for news, information, and analysis. Digital Music News has quickly grown from its humble roots as a small, executive news service to the most widely read information source in the field.


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