Satellite Radio merger offers less than meets the ear
by J. Scott Orr October 15, 2007
"Are you on?" Or are you a subscriber to "the best radio on radio?"
Next year, you may be both if the federal government approves a controversial merger of the nation's only two satellite radio providers: XM Satellite Radio, with its "Are you on?" tagline and Sirius Satellite Radio, which bills itself as "the best."
The merger would create a massive single provider offering a menu of 300 channels to its millions of subscribers. It also would free up the company to dictate pricing and programming policies without competitive pressures.
But what will this unprecedented multitude of radio content mean to you, the listener?
Maybe less than you think.
While backers of the deal say it will greatly enhance the listening opportunities for customers, an examination of the current XM and Sirius channel offerings shows that, with the exception of a few talk shows and some sports play-by-play, the two providers offer largely the same content.
Under their current plans, subscribers would be given the option of keeping their current content and adding the "best of" the other. Total net gain in channels: about a dozen.
Sirius CEO Mel Karmazin, who would head the combined venture, told Congress earlier this year that consumers would be given content from both companies for less than the cost of subscribing to both services.
"Today, you can get great music plus the NFL, NASCAR and Martha Stewart on Sirius; or, Major League Baseball, PGA Golf, Oprah and great music on XM. But if you want all of this, or the best of both, you need to subscribe to two services, buy two radios and pay two monthly fees," he said.
"If our merger is approved, we will offer consumers a much more attractive choice: the best of each service on one radio at a price below the cost of the two services today," Karmazin added.
But that does not mean the combined company will offer subscribers all 170 XM channels and all 130 Sirius channels. And even if it did, there is so much duplication of content that few consumers would want it.
The companies have not spelled out what specific channels will be available as part of their "best of" offerings.
They have said they will offer two "a la carte" options which will require new radios. The first would allow the selection of 50 channels from a menu of 100 channels from either XM or Sirius, but not both, for $6.95 per month. A second would allow the selection of 100 channels from an unspecified menu, with XM subscribers allowed to select some Sirius stations and vice versa, for $14.95 per month.
With existing radios, customers will be able to continue receiving their current service, plus "certain programming" from the other for $16.95 per month.
Chance Patterson, a spokesman for XM, acknowledged that there is duplication among the two providers' current offerings, though he said both offer unique programming.
"The best way to look at it is that if you're an existing XM subscriber, you would have access to the best of Sirius, which would include about a dozen channels. Sirius subscribers would get about a dozen of the best XM channels available," he said.
Dennis Wharton, executive vice president of the American Association of Broadcasters, which opposes the merger, said consumer visions of being able to pick and choose their favorite channels from a combined XM-Sirius menu are greatly exaggerated.
"They will be offering bundled packages of programming. It you go to a restaurant and order a la carte, you don't have to get 20 or 30 dishes before you get the single item you want from the menu. Calling it a la carte is a sham," he said.
Between them, XM and Sirius have a combined 14 million subscribers (that's something like 13 percent of all American households) who pay monthly fees of $12.95 for dozens of channels of music, news, sports, talk, comedy, weather and traffic.
Lay the two programming lists side by side and the similarities are startling, particularly in the music categories which make up the majority of the available channels. Here are some of the similarities:
Hits: Both offer pop hits by decade for the '50s, '60s, '70s, '80s and '90s. XM has "Top 20 Hits" while Sirius has "Top 40 Hits." They both offer a station for love songs. And while Sirius has "Easy Listening," XM has "Lite Pop Hits."
Rock: XM offers "Deep Classic Rock," Sirius has "Deeper Classic Rock." Sirius has classic alternative and new alternative, XM has '70s and '80s alternative and new alternative. They both have channels for punk, heavy metal, grunge, reggae and more.
News: They both have CNN and CNN Headline News, the BBC, CNBC, Bloomberg, and Fox News.
Sports might be the key area where there are substantial differences: XM offers Major League Baseball, the National Hockey League and big-time college football; Sirius has the National Football League, the National Basketball Association and NASCAR.
Sirius also has perhaps the biggest name in talk radio, Howard Stern, with two separate stations, while XM can offer only Opie and Anthony in the shock jock category.
