Tag Archives: XM

Is Satellite Radio Dying?

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Howard Stern Displayed on a Sirius XM RadioA story entitled Satellite Radio Still Reaches for the Payday published on December 26th, 2008 describes the challenges facing Sirius XM.  There are several interesting insights shared in the article.  If you’ve read some of my other material here, you know this is a subject I care about.

Before the merger, I did not pay that much attention to Sirius.  I enjoyed the service XM provided and wasn’t really concerned with the business decisions being made by its competitor.  Not that it would have mattered – but I should have paid more attention.  Some of the significant numbers:

  1. In 2005, Sirius secured the exclusive services of Howard Stern for 500 million dollars.
  2. It costs between 250 and 300 million dollars to put a satellite in space.
  3. The company earned 613 million dollars in the third quarter of 2008
  4. The company has 1 billion dollars in debt due in 2009

That’s alot of large numbers.  But to balance the equation, the stock price of the company currently sits at 16 cents per share.  InfoWorld believes satellite radio will not survive the recession.  Add on that the combined company has let go approximately 25% of the company’s associates and you are left with few options.  The company’s chief assets appear to be its satellites and Howard Stern (based on the value they placed on his contract).

I like the service – but it looks like some banks are going to hold some more useless paper here pretty soon.

The End of a Good Thing – XM and Sirius Merge

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My favorite service disappeared today.  XM and Sirius have merged creating Sirius XM.  The Justice Department has indicated that the merger would not harm competition, er the consumer.  We effectively no longer have competition so we’ll have to cross our fingers on this statement. Engadget has the full announcement.

I am concerned.  My cable provider provides an almost weekly lesson in how the lack of competition creates a poor service provider.  This statement on Washington Business Journal is supposed to help me feel better.  It accomplishes the exact opposite:

Subscribers will also now have the option to pick from different packages of channels, known as a la carte programming.

My belief is that in a year’s time I will have the privilige of spending more to get less.  A la carte pricing = nickel and diming.

Update:
I ran across a few more quotes I’d like to add to my bonfire of disgruntlement…

He said the review showed that, because XM and Sirius equipment was not compatible, subscribers rarely shifted from one system to the other in their homes or cars; a switch could be expensive and time-consuming.

“Historically, once you choose one or the other of the audio services, you’re not going to switch,” he said. “A price switch is not going to cause you to jump to the other services.”

That rationale could be used to support a merger of any two competing yet dissimilar technologies. Do you suppose we’ll be asked to accept a merger of DSL and cable providers any time soon. It’s about the same exercise switching a satellite receiver and a modem. Right?