What happens when two satellites 'do it'?

February 19, 2007 1:56 PM

XM and Sirius announced their plans to merge. What happens now?

I am a recent XM subscriber with a bunch of questions. Some may be impossible to answer at this point, but any speculation from an enlightened few would help me understand what the heck this means.

--How likely is this to be considered a monopoly and be rejected by the government?

--What will they call the new company?

--Will they keep all of their stations, or eliminate the overlapping ones?

--Will my satellite radio unit work with both satellites?

--Can Opie and Anthony and Howard Stern coexist?

posted by mjthomas to technology (17 comments total)

The satellite TV market has undergone a number of mergers over the years until it is down to just two players right now: DirecTV and DISH Network; they tried to merge but it was rejected by the FCC.
posted by TedW at 2:11 PM on February 19, 2007

What happens now? I'd guess they get an FCC smackdown and go back to their separate ways much like DirecTV and Dish Network.

If, by some miracle, they do get approval to merge, as a Sirius subscriber, I'll be quite interested to hear what their plans are regarding programming and technology.
posted by xiojason at 2:12 PM on February 19, 2007

Highly unlikely to happen. When the FCC allowed satellite radio services to start, one of the fundamental requirements was that they could never merge. My guess would be that the FCC will let one or both go bankrupt instead.
posted by Malor at 2:16 PM on February 19, 2007

If the merger is so unlikely, why are they even trying? Are they seeking xiojason's miracle? Is the cost of attempting the merger worth the reward (no matter how unlikely) of the merger itself?
posted by mjthomas at 2:24 PM on February 19, 2007

What does this do to their stocks? I own a few hundred shares of Sirius. Does it go up or down?
posted by iphog at 2:48 PM on February 19, 2007

There is no competing service. It couldn't possibly stand up to anti trust laws.
posted by Megafly at 2:52 PM on February 19, 2007

It won't happen until a third party appears to take up the signal they will have to sell to get the FCC to approve the decision. Anyone want to make a bid for what is essentially cable for your car? Be my guest.
posted by parmanparman at 3:07 PM on February 19, 2007

iphog:

In theory, our Sirius shares should/could come up out of the crapper. But I wouldn't expect this news to be a slam dunk for us, and I wouldn't expect a skyrocket, either.

(I anticipate that the price might suddenly spike [a la Apple with iPhone, but not as much], and then those of us who have had enough might sell off our shares and the price might come back down. Or if you have patience you could wait it out for however many months/years this takes to go through and see what happens....)

But I don't really know beans.
posted by iguanapolitico at 3:10 PM on February 19, 2007

Megafly, the competing service is terrestial radio, and since it's been kicking sat-radio's butt, I suspect the merger will get anti-trust approval. Ultimately, it's all about how much lawyering and lobbying the parties involved want to do.

As for the OPs questions,

1. As we can see, the guesses go both ways right now, none of us are in any real position to know though. It largely depends on if the FCC sees Sat-Radio as part-and-parcel of regular radio's market, or it's own market.

2. Xirius? Again, anyone's guess is as good as anothers.

3. Seems unlikely they would keep duplicate channels. One usually merges two companies to reduce costs, and increase customer base; given that neither XM nor Sirius is doing all that well at ROI now, it only makes sense the combined company would want to cut costs.

4. Seems unlikely. According to wikipedia, XM uses aacPlus and AMBE for encoding, on a 12mhz range of the S band at 2332.5 to 2345.0 MHz, while Sirius uses a proprietary fork of Perceptual Audio Coder, on a 12mhz range of the S band at 2320 and 2332.5 MHz. While it's possible that both companies were forward thinking enough to make their devices flexible enough to switch range and codec, doing so would have made them more expensive. Not to say they won't have a trade-in program, for current or restarting subscribers.

5. Why not? It's not like there's some central studio where the two would have to co-exist. Any restrictions would be on a personal or contractual basis (ie, Stern won't sign with anyone that also signs Andy & Opie).
posted by nomisxid at 3:18 PM on February 19, 2007

Damn. I just renewed Sirius in Canada, so either I'm looking at a trade-in, or else there will be no merger up here and I will be forever Dylan-less.
posted by maudlin at 3:41 PM on February 19, 2007

I offer, by way of comparison, the shotgun merger of Sky TV and British Satellite Broadcasting in 1990/91.

Short version:

a) Of the two systems, the one with the largest user base and the lowest consumer tech cost becomes dominant,
b) Users of the other are supported for several years, but
c) Only the preferred platform gets the new stuff.
d) Where programming/music format overlaps, the larger partner's offering will kill the smaller's

In the UK TV example, all of BSB's channels were wiped out at a stroke but that probably won't happen in this case since each partner has winners.

If I were running the NewCo, I'd sell the other satellite or move it to another area to make some money on the remaining inventory.

South America might make sense from a programming crossover POV. Europe/UK would seem clever but the voltage is all wrong for existing products and the UK has a developed (and incompatible) digital radio market already.

Depending on subscriber numbers it might actually be cheaper in the medium term to give all of one company's customers a replacement radio, and ditch the bird -- I wouldn't put money on that, though.
posted by genghis at 4:34 PM on February 19, 2007

How about the car manufacturers that offer sat radio as standard equipment in new cars? They must have signed large exclusivity contracts with either Sirius or XM and there's a good chance 50% of those new owners will end up with worthless systems. This is a huge can o'worms and will possibly end up with one of them going out of business completely.

I hope Howard Stern cashed in all of his shares or he might have to pawn that big ring he just bought his girlfriend.
posted by 543DoublePlay at 5:42 PM on February 19, 2007

FCC already said no.

Previously.
posted by ikkyu2 at 9:10 PM on February 19, 2007

They said no, but Sirius and XM seem to be attempting to change that, I guess.
posted by litlnemo at 4:44 AM on February 20, 2007

I predict it'll happen sooner or later. Either the FCC gives approval now or one of them goes bankrupt and the other buys their assets.
posted by electroboy at 6:52 AM on February 20, 2007

I don't think anyone really knows the answer to most of your questions yet, but I can say that Stern and O&A can coexist. A couple years ago, when both were still on terrestrial radio, they were both on the same radio station in Philadelphia (94.1 WYSP) and probably other places too.
posted by BiffSlamkovich at 8:24 AM on February 20, 2007

2. Xirius? Again, anyone's guess is as good as anothers.

S&M?
posted by nanojath at 10:02 AM on February 20, 2007