Sirius Satellite Radio News

You may have heard of the merger of SIRIUS Radio and XM. Interestingly, while the merger will bring many benefits to the company (mostly in combined production costs and additional programming) there are no immediate plans to combine the two satellite networks. Both systems will continue to function, which means, one, the SIRIUS/XM company has a lock on its market, and two, that Satellite Radio is now offering even more selection to its users. What are some of the channels you can expect if you sign up for SIRIUS? Are they comparable or superior to terrestrial radio?

Consider a list of SIRIUS Satellite Radio channels. There are over 130 channel streams on SIRIUS alone. You can listen to all the latest music from your favorite artists with mainstream channels like SIRIUS Hits 1 as well as The Pulse, which features the best of the 1990s and 2000’s. If you have a preference for the Golden Age of music then you can opt to listen to SIRIUS Gold, hits from the 1950s all the way to the 1960s with 60s Vibrations, the 1970s with Totally 70s, and 1980s with the Big 80s. The system of SIRIUS allows for many more niche channels than ordinary radio. Therefore, don’t be surprised to find entire channels devoted to the art of one popular musician, whether it be Elvis Pressley, Jimmy Buffet, The Grateful Dead or Bruce Springsteen.

There are also multiple sub-genres of rock to look through, such as Classic Rock, Glam Metal, Jam Bands, Garage Rock, Indie Rock, Hip-Hop, Heavy Metal, Reggae and Eclectic/Freeform. There is also a variety of country styles, from Classic Country to Bluegrass, and Electronic/Dance music, including Disco, Chill Out music and Trance. If you have more soulful tastes then you can’t go wrong with Contemporary Christian and Gospel channels, not to mention Jazz, classical music and international music found at channels like Universo Latino, Rock Velours and Energie2, the best global charts hits.

What about radio entertainment? If you are looking for news, commentary or comedy then you can tune into the SIRIUS network. SIRIUS leads the way in radio entertainment, most notably in their acquisition of comedian-shock jock Howard Stern. Stern has two channels, one of which broadcasts his live morning show and then ends with reruns. His second channel features a delayed replay of the morning broadcast along with Howard’s friends Bubba the Love Sponge Show and Scott Ferrall. There is also a talk channel with SIRIUS Stars and E! Entertainment Radio for celebrity gossip. Special interest channels include SIRIUS OutQ for gay and lesbian talk radio, Cosmo Radio for women, Martha Stewart Living Radio and Doctor Radio for health and medical information.

The Road Dog Trucking channel will provide trucking entertainment, while Maxim Radio and Playboy Radio spice things up with hot talk. (Remember some adult channels require listeners to “opt-in”) There are four comedy channels to giggle at, including Blue Collar Comedy, Raw Dog, Laugh Break and The Foxxhole, which is comedian and actor Jamie Foxx’s own channel. There are also dozens of channels covering sports, news, religion and traffic and weather.

SIRIUS Satellite Radio offers some of the most prolific programming in any medium.

The satellite radio revolution has certainly taken the world by storm. Considering the change that satellite television had on the way in which consumers watch television, it really only seems natural that satellite radio would have the same effect. Just as satellite television greatly expanded the number of television viewing options we have, satellite radio has done the same.

Satellite radio works through the transmission of radio signals from a satellite that orbits the earth. It is really no different than the way satellite television works. As a result, consumers are able to take advantage of a much broader coverage area as well as reception that is much clearer and stronger. If you have grown tired of losing your favorite radio station as soon as you travel outside its geographical location or of listening to static filled radio transmissions, satellite radio is the perfect solution.

You can be assured that you can pick up reception that is crystal clear anyway. This is an advantage that has been a long time coming, especially for consumers who grew tired long ago of not being able to pick up favorite radio stations in certain areas such as coastal waters.

Another reason consumers are gleefully making the switch to satellite radio is the fact that they are able to get out from under the thumb of FCC censorship rules. This is because satellite radio is not constrained to the rules of FCC censorship. Broadcasters have far greater control and freedom in choosing the content they air. Subscribers have a much greater programming variety as a result. This is a benefit that has become extremely popular to many on-air talents who have felt they were too constrained under the FCC guidelines in the past. Howard Stern is just one of many on-air talents who found satellite radio to be the perfect home.

Of course, the fact that satellite television typically does not have any commercials has also been a major boon. If you are one of those drivers who tend to flip back and forth between radio stations, scanning for those stations that are in between commercial breaks, the commercial free atmosphere of most satellite radio programs will certainly appeal to you. Most regular radio programs spend an average of 20 minutes every single hour on commercials. Unless you just enjoy listening to commercials, and few of us do, this is wasted time when we could be enjoying something else. Satellite radio programming ensures that you can spend time listening to what you want without having to scan back and forth between stations.

Satellite radio programming does come at the price of a subscription; however, in most cases that price is greatly reduced from what most of us are already paying for satellite television programming. Considering the number of neat little gadgets that have been introduced lately to allow you to take your satellite radio programming literally anywhere, this means you can enjoy your satellite radio programming whether you are at home, on the road or hanging out at the beach.

DOJ - http://www.usdoj.gov/opa/pr/2008/March/08_at_226.html

Statement of the Department of Justice Antitrust Division on its Decision
to Close its Investigation of XM Satellite Radio Holdings Inc.’s Merger
with Sirius Satellite Radio Inc.
Evidence Does Not Establish that Combination of
Satellite Radio Providers Would Substantially Reduce Competition

WASHINGTON — The Department of Justice’s Antitrust Division issued the following statement today after announcing the closing of its investigation into the proposed merger of XM Satellite Radio Holdings Inc. with Sirius Satellite Radio Inc.:

“After a careful and thorough review of the proposed transaction, the Division concluded that the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers. The Division reached this conclusion because the evidence did not show that the merger would enable the parties to profitably increase prices to satellite radio customers for several reasons, including: a lack of competition between the parties in important segments even without the merger; the competitive alternative services available to consumers; technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers.

“The Division’s investigation indicated that the parties are not likely to compete with respect to many segments of the satellite radio business even in the absence of the merger. Because customers must acquire equipment that is specialized to the satellite radio service to which they subscribe, and which cannot receive the other provider’s signal, there has never been significant competition for customers who have already subscribed to one or the other service. For potential new subscribers, past competition has resulted in XM and Sirius entering long-term, sole-source contracts that provide incentives to all of the major auto manufacturers to install their radios in new vehicles. The car manufacturer channel accounts for a large and growing share of all satellite radio sales; yet, as a result of these contracts, there is not likely to be significant further competition between the parties for satellite radio equipment and service sold through this channel for many years. In the retail channel, where the parties likely would continue to compete to attract new subscribers absent the merger, the Division found that the evidence did not support defining a market limited to the two satellite radio firms that would exclude various alternative sources for audio entertainment, and similarly did not establish that the combined firm could profitably sustain an increased price to satellite radio consumers. Substantial cost savings likely to flow from the transaction also undermined any inference of competitive harm. Finally, the likely evolution of technology in the future, including the expected introduction in the next several years of mobile broadband Internet devices, made it even more unlikely that the transaction would harm consumers in the longer term. Accordingly, the Division has closed its investigation of the proposed merger.”

ANALYSIS

During the course of its investigation, the Division reviewed millions of pages of documents, analyzed large amounts of data related to sales of satellite radios and subscriptions for satellite radio service, and interviewed scores of industry participants.

Extent of Likely Future Competition between XM and Sirius

The Division’s analysis considered the extent to which the two satellite radio providers compete with one another. Although the firms in the past competed to attract new subscribers, there has never been significant competition between them for customers who have already subscribed to one or the other service and purchased the requisite equipment. Also, competition for new subscribers is likely to be substantially more limited in the future than it was in the past.

As to existing subscribers, the Division found that satellite radio equipment sold by each company is customized to each network and will not function with the other service. XM and Sirius made some efforts to develop an interoperable radio capable of receiving both sets of satellite signals. Depending on how such a radio would be configured, it could enable consumers to switch between providers without incurring the costs of new equipment. The Division’s investigation revealed, however, that no such interoperable radio is on the market and that such a radio likely would not be introduced in the near term. For example, in the important automotive channel, such a radio could not be introduced in the near term due to the engineering required to integrate radios into new vehicles. The need for equipment customized to each network means that in order to switch from XM to Sirius, or vice versa, a subscriber would have to purchase new equipment designed for the other service. In the case of a factory-installed car radio, switching satellite radio providers would have the additional disadvantage of requiring an aftermarket radio that would be less integrated into the vehicle’s systems. Data analyzed by the Division confirmed that subscribers rarely switch between XM and Sirius.

As to new subscribers, XM and Sirius sell satellite radios and service primarily through two distribution channels: (1) car manufacturers that install the equipment in new cars and (2) mass-market retailers that sell automobile aftermarket equipment and other stand-alone equipment. Car manufacturers account for an increasingly large portion of XM and Sirius sales, and the parties have focused more and more of their resources on attracting subscribers through the car manufacturer channel. Historically, XM and Sirius engaged in head-to-head competition for the right to distribute their products and services through each car company. As a result of this competitive process, XM and Sirius have provided car manufacturers with subsidies and other payments that indirectly reduce the equipment prices paid by car buyers to obtain a satellite radio. However, XM and Sirius have entered into sole-source contracts with all the major automobile manufacturers that fix the amount of these subsidies and other pertinent terms through 2012 or beyond. Moreover, there was no evidence that competition between XM or Sirius beyond the terms of these contracts would affect customers’ choices of which car to buy. As a result, there is not likely to be significant competition between XM and Sirius for satellite radio equipment and service sold through the car manufacturer channel for many years.

The Division’s investigation identified the mass-market retail channel as an arena in which XM and Sirius would compete with one another for the foreseeable future. Both XM and Sirius devote substantial effort and expense to attracting subscribers in this arena, with both companies offering discounts, most commonly in the form of equipment rebates, to attract consumers. Retail channel sales have dropped significantly since 2005, and the parties contended that the decline was accelerating. However, retail outlets still account for a large portion of the firms’ sales, and the Division was unable to determine with any certainty that this channel would not continue to be important in the future.

Effect on Competition in the Retail Channel

Because XM and Sirius would no longer compete with one another in the retail channel following the merger, the Division examined what alternatives, if any, were available to consumers interested in purchasing satellite radio service, and specifically whether the relevant market was limited to the two satellite radio providers, such that their combination would create a monopoly. The parties contended that they compete with a variety of other sources of audio entertainment, including traditional AM/FM radio, HD Radio, MP3 players (e.g., iPods®), and audio offerings delivered through wireless telephones. Those options, used individually or in combination, offer many consumers attributes of satellite radio service that they may find attractive. The parties further contended that these audio entertainment alternatives were sufficient to prevent the merged company from profitably raising prices to consumers in the retail channel – for example, through less discounting of equipment prices, increased subscription prices, or reductions in the quality of equipment or service.

The Division found that evidence developed in the investigation did not support defining a market limited to the two satellite radio firms, and similarly did not establish that the combined firm could profitably sustain an increased price to satellite radio consumers. XM and Sirius seek to attract subscribers in a wide variety of ways, including by offering commercial-free music (with digital sound quality), exclusive programming (such as Howard Stern on Sirius and “Oprah & Friends” on XM), niche music formats, out-of-market sporting events, and a variety of news and talk formats in a service that is accessible nationwide. The variety of these offerings reflects an effort to attract consumers with highly differentiated interests and tastes. Thus, while the satellite radio offerings of XM and Sirius likely are the closest substitutes for some current or potential customers, the two offerings do not appear to be the closest substitutes for other current or potential customers. For example, a potential customer considering purchasing XM service primarily to listen to Major League Baseball games or one considering purchasing Sirius service primarily to listen to Howard Stern may not view the other satellite radio service, which lacks the desired content, as a particularly close substitute. Similarly, many customers buying radios in the retail channel are acquiring an additional receiver to add to an existing XM or Sirius subscription for their car radio, and these customers likely would not respond to a price increase by choosing a radio linked to the other satellite radio provider. The evidence did not demonstrate that the number of current or potential customers that view XM and Sirius as the closest alternatives is large enough to make a price increase profitable. Importantly in this regard, the parties do not appear to have the ability to identify and price discriminate against those actual or potential customers that view XM and Sirius as the closest substitutes.

Likely Efficiencies

To the extent there were some concern that the combined firm might be able profitably to increase prices in the mass-market retail channel, efficiencies flowing from the transaction likely would undermine any such concern. The Division’s investigation confirmed that the parties are likely to realize significant variable and fixed cost savings through the merger. It was not possible to estimate the magnitude of the efficiencies with precision due to the lack of evidentiary support provided by XM and Sirius, and many of the efficiencies claimed by the parties were not credited or were discounted because they did not reflect improvements in economic welfare, could have been achieved without the proposed transaction, or were not likely to be realized within the next several years. Nevertheless, the Division estimated the likely variable cost savings – those savings most likely to be passed on to consumers in the form of lower prices – to be substantial. For example, the merger is likely to allow the parties to consolidate development, production and distribution efforts on a single line of radios and thereby eliminate duplicative costs and realize economies of scale. These efficiencies alone likely would be sufficient to undermine an inference of competitive harm.

Effect of Technological Change

Any inference of a competitive concern was further limited by the fact that a number of technology platforms are under development that are likely to offer new or improved alternatives to satellite radio. Most notable is the expected introduction within several years of next-generation wireless networks capable of streaming Internet radio to mobile devices. While it is difficult to predict which of these alternatives will be successful and the precise timing of their availability as an attractive alternative, a significant number of consumers in the future are likely to consider one or more of these platforms as an attractive alternative to satellite radio. The likely evolution of technology played an important role in the Division’s assessment of competitive effects in the longer term because, for example, consumers are likely to have access to new alternatives, including mobile broadband Internet devices, by the time the current long-term contracts between the parties and car manufacturers expire.

The Division’s Closing Statement Policy The Division provides this statement under its policy of issuing statements concerning the closing of investigations in appropriate cases. This statement is limited by the Division’s obligation to protect the confidentiality of certain information obtained in its investigations. As in most of its investigations, the Division’s evaluation has been highly fact-specific, and many of the relevant underlying facts are not public. Consequently, readers should not draw overly broad conclusions regarding how the Division is likely in the future to analyze other collaborations or activities, or transactions involving particular firms. Enforcement decisions are made on a case-by-case basis, and the analysis and conclusions discussed in this statement do not bind the Division in any future enforcement actions. Guidance on the Division’s policy regarding closing statements is available at: http://www.usdoj.gov/atr/public/guidelines/201888.htm.

The world of satellite radio was shaken up once again when it was announced on March 11, 2008 that the chief creative officer of XM radio, Lee Abrams, had resigned. Abrams joined XM in 1998 and has been credited with shaping much of the company’s success. Following the announcement of his resignation from XM, it was indicated that he will be returning to his hometown of Chicago in April in order to join the team of a new start-up company. That company is largely reported to be Tribune, where Abrams is expected to work as the Chief Innovation Officer. Tribute currently operates 23 television stations as well as the Superstation WGN.

The lead-up to XM’s success began in 1997 when two licenses for nationwide satellite radio broadcasting were issued by the federal government. Abrams reported later that he had been contacted by a headhunter who was looking for someone to fill the programming job at one of those new companies. Abrams leapt at the opportunity to join XM Satellite Radio and immediately set about designing a program that would practically blow AM and FM out of the water. Obviously, his efforts worked as XM is now considered to be a high successful organization. Over the past few years the Network has added a pool of impressive talent. Abrams is considered by many to be a radio veteran and is often given credit for creating the album rock format that is frequently used on FM stations even today. In his role at XM, Abrams was in charge of both programming and content.

Many are already speculating that Abrams’ move could be a strong indicator that the long-awaited merger of XM and Sirius could be finally about to happen. News of the merger was announced in the summer of 2007 and many have been anxiously awaiting completion of the merger; however, red tape from the Department of Justice involving the potential monopoly that such a merger could represent have held up completion of the deal. It is largely anticipated that the merger will happen sometime in 2008, especially following concessions made on the part of both XM and Sirius in order to placate various concerns.

The news of Abrams’ resignation falls not long after news broke last summer that the Chief Executive Officer of XM, Hugh Panero, would be stepping down in August of 2007. Rumors had swirled for some time that Panero would be leaving following the outcome of the merger; however, Panero’s resignation precipitated that event; leaving many to wonder when and how the merger would finally occur.

There has been no word yet who will fill the shoes that Lee Abrams has left behind in his role at XM. XM was initially launched in September of 2001 in the Dallas/Fort Worth and San Diego areas. Since that time, XM has become nationwide and has more than six million subscribers. Today XM boast 73 different music channels as well as 39 sports, news, entertainment and talk channels, 23 sports channels and 21 regional weather and traffic channels.