XM & Sirius merger - is this a problem?
Much of the "hoo-hoo" about XM and Sirius merging has been "FUD" perpetrated by the "incumbent" terrestrial broadcast community ("free radio", except in the U.K.) who have been lobbying the U.S. Congress since the merger proposal was announced. Terrestrial broadcasters are in absolute terror of a merged XM and Sirius: they see it as a death knell for terrestrial radio.
So, if the competing radio services are scared to death of satellite radio, why does everyone think that the merger is going to be a failure?
Oh, and remember, the terrestrial broadcasters are the ones that supported the increace in royalties on internet radio - because THAT scares them to death as well.
(A reprint of an editorial I had in Radio Broadcast Review on this very subject...)
Having followed the Luddite implementation of HD radio so far, I have to ask the question: is the merger of XM and Sirius a "serious" problem for terrestrial broadcasters, or just another excuse for the poor performance broadcast has been turning in the past few years?
Let's face reality: the DARS went out on a very thin limb when they started broadcasting: huge (and as yet unrecovered) costs for infrastructure, customer capture and advertiser recruitment. Yet they chose to make the unenviable investment in innovative technology, breaking ground in a completely new medium that happens to target a market already served by incumbent terrestrial broadcasting. DARS paid heavily to break this ground, and, if the market doesn't turn around for them soon, we may see several new meteors as the satellites are deorbited.
So why the concern from terrestrial broadcasters? DARS does NOT serve the majority of the listener market - only 10-12 million subscribers, and the actual listening numbers less than that. The advertiser base (on XM at least) is only about half a dozen cross-channel clients, and given the large amount of fill around the adverts, even these are being spread thin to fill the medium. With the additional hurdles of requiring cost-plus receivers and subscriptions from consumers, this is very much an up hill battle for the satellites to fight.
The only POSSIBLE threat to incumbent broadcasters is IF the satellite services are doing a BETTER job of providing service to the consumers, and actually taking listeners away from the terrestrial market.
Hmmm...could this possibly be the case? Could it be that this "upstart" pair of services has found the "sweet spot" that allows delivery of content consumers WANT that is unavailable from the incumbent broadcast base?
Oh, here's another clue: if terrestrial broadcast were providing the content that consumers wanted - both in content and delivery - would iPods be such a big problem? Is it possible that the iPod "phenomena" - and the huge set of issues surrounding content ownership and licensing - are indicative of the larger problem of broadcasters (and their suppliers/advertisers) losing sight of the SERVICE that they are supposed to be providing: consumer ENTERTAINMENT?
Come on, folks! Get a clue! Broadcasting is NOT the business of driving profits for investors - it's the business of providing ENTERTAINMENT to consumers that generates a profit from consumer DELIGHT, not legislative lock-down.
If the satellite services can't provide better entertainment than terrestrial services, they will fail - quite spectacularly - without any legislation. They are almost there now, and a merger of XM and Sirius will not change the outcome - except to accelerate it as the "choices" that each offered are eliminated to "streamline" operations.
On the other hand, if DARS IS providing superior customer service...well, the same melt-down can happen in terrestrial radio.
I'll conclude with my vision of broadcast entertainment in 2015:
The "Big Four" broadcasters - AT&T, Sprint, Verizon and Microsoft - provide 70% of all terrestrial broadcast content;
30% of broadcast content is obtained by consumers from "local" content providers via Bluetooth and WiFi "zone" broadcasts operated by individuals, clubs and retailers;
95% of the US population gets its entertainment via "real-time Podcasting" on their broad-band/Bluetooth/WiFi mobile phones that "dock" in their vehicles and homes;
The US Department of Commerce's Traffic Watch and Navigation satellites "Rock" and "Roll" are replaced after 20+ years of service with new satellites "Lost" and "Found";
The AM and FM spectrum is reallocated to Amateur Radio to develop a use for this "unused and useless low-information-density" spectrum;
Hey, it might not be true yet, but that's the way I see 'em.