Merging Towards Nothing

The merging of Sirius and XM Satellite Radio System, the only two satellite system operating in US and Canada last February 19, 2007, brought much contention to the subscribers as well as market competitors.  National Association of Broadcasting (NAB) discloses that the movement of two companies toward coalescence creates a monopoly of the satellite market which is unfavorable for the satellite subscribers.

A holder of monopoly is a single seller who has exclusive control of the supply and marketing of some product or service and this exclusivity enables the monopolist to set a selling price that is higher than it would be in the absence of competitors (Grolier Academic Encyclopedia, 567-568). NAB capitalizes that the Sirius/XM Merge is illegal, violating Section 7 of Clayton Act and may also bring about inflation guised in the form of  radio a la carte.

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NAB’s numerous protest is actually a guise to prevent the materialization of a larger competitor in the radio market. Since NAB generally consist of terrestrial radio, the emergence of a bigger satellite company with newer products and more channels to choose from would pose as a threat to them. New product offered by the proposed merge is radio broadcasting with multi-faceted channels as well as commercial-free line. Clearly, the opposition is afraid that the merging will raise the rate of subscribers and there is possible transfer of terrestrial clients to that of the satellite products.

So where would this demise lead to? If merge would actually be approved by Federal Exchange Commision and DOJ, would it mean possible salvation from economic quagmire demarcated by debt of the consolidated Sirius/XM?  In the face of growing competitive marketing of broadcasting which are dominated by the giants ( e.g. iPODs, MP3s, cable TV), it is possible that, on the long run the movement of Sirius and XM, if the merged will be realized,  will  be doomed to economic pitfall.

Media broadcast is a large and competitive form of economic market. Unlike in Europe where the government controls the fate media broadcasting market, private enterprises rule in US and Canada. Hence, the fate XM/ Sirius merge lies ultimately in face of competing enterprises and consumers. Technology-wise, first like Apple and MTV Corporation has much to offer than satellite radio broadcasting, or to be exact, all forms of radio broadcasting. The rapid economic decline of radio consumer with the sharp increase in audio-visual broadcasting subscribers supported this insight.

The movement of Sirius and XM satellite companies toward merging as a strategy to save them from economic ruin and to be competitive against terrestrial competitors, albeit facing opposition from National Association of Broadcasters, may actually lead to nothing c onsidering the economic giants in the area.

 

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