Media Curmudgeon

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December 12, 2006

Government Interference

How's this for being a dilemma: Mel Karmazin of Sirius Satellite Radio has been hinting of a possible merger with rival XM Satellite Radio, and it seems like a combination would make sense. But the U.S. government won't let them merge because a law says that there must be two competing satellite radio companies. So, until someone is stupid enough to rent satellite space and start a third satellite radio company, Sirius and XM must stay apart, no matter how much money they lose.

In other words, the government law is wrong; it's unnecessary interference in business matters. The recent announcements of both Sirius and XM indicated that growth of subscribers is slowing and that their previous forecasts were too rosy. In other words, satellite radio is not a hit.

Why not? For the same reason the record companies are crying their woes and finding it harder and harder to make money--iPods. When I take my daily walk around the birdal path in Central Park, it seems like every third person has an iPod plugged into their ears. I see no one with a portable satellite radio antenna and ear phones. I tried it once--wandering around New York listening to an XM portable radio with a special, small antenna attached to my clothes. The reception wasn't too good and I had to continually adjust the antenna. The choices of over 150 channels confused me with meaningless, silly music channel names. I gave up listening to a portable satellite radio gladly.

I now listen to "On the Media" and "The Brian Lehrer Show" podcasts, books, and music on my iPod. I realize that this is an unscientific and worthless convenience sample of one, but I do believe it is an example of why an iPod is a much better alternative than a satellite radio and might be indicative of the trouble the two companies are having.

Their recent forecasts were dire and the stock prices of the two companies are in the tank. Sirius and XM should merge to save money by combining back-end operations, do away with senseless program channel duplication, save money on advertising, and concentrate on a receiver technology that gets a single service. But the government won't let them merge, and even if the government would let them combine, the egos of the CEOs of the two companies would probably get in the way.

That's what happens when you get two companies competing violently and nastily--they begin to hate each other for no good reason, sort of like the tribal cival wars in the Middle East. The government can't solve that problem, and it is causing a satellite radio problem. I think satellite radio might last as long as Iraq might last as a unified country.

Posted by Charles Warner at December 12, 2006 06:02 PM

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