Today the Justice Department approved the purchase (merger) of XM satellite radio by its little brother Sirius, creating a company with almost 13 million subscribers, never made a profit, and will have 1.6 billion in debt. See previous posts for some background on the finances of the sat radio industry. Where is the money going to come from? Remember, these companies are losing more than a million dollars a day....each. Oh yeah...it's an all-stock transaction. (today Sirius is $3.70 a share, while XM is worth $13.98) Who needs money anymore?
Somehow, Justice thinks having only one sat radio provider won't be a problem as satellite radio competes with broadcast, CD's, MP3's etc etc. The fact that Sirius/XM will be a monopoly seems to have been lost on them. Sat radio is a unique product, and if anyone believes this merger will be good for us subscribers you need to take a mental health day or 2...or 3.
Let us look at some recent mergers that have bombed...Daimler Benz, AOL Time-Warner, HP Compaq, Glaxo Smith-Kline, Sprint Nextel just to name a few.
The last barrier to the merger is the FCC. If I remember my history, when XM and Sirius were licensed in 1995, it specifically mentioned the companies would not merge. FCC chairman and self-styled morality czar Kevin Martin said "the companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices" and "The hurdle here, however, would be high."
That said, the FCC seems far more interested in filling its wallet by collecting fines over Nipplegate than caring about the wallets and blood pressure of 13+million subscribers...who will be on hold for 90 minutes waiting to talk to a script-reading automaton at an Indian call center when their accounts get screwed up. Not if...when. When you're a monopoly, why invest in customer service? Where are the customers going to go, the competition? That's right...there won't be any. Executives claim they'll be 7 billion a year in savings. Isn't that what they said at AOL, Chrysler and Sprint? Of course I'll respect you in the morning.
Monday, March 24, 2008
Saturday, March 8, 2008
Live from New York...
I'm typing this from mid-town Manhattan, as the Intercollegiate Broadcasters convention is here. Imagine roughly 1200 young, bright-eyed high school and college radio folk from all over the country, and quite a few industry heavy-hitters to learn from. Besides bringing out my inner radio geek, I've observed a couple of things.
First, it seems like every college radio person is a manager of something. One station even had an assistant sports director! Way too many chiefs and damn few indians. Also, almost no one wore a watch. Big deal you say? Maybe, but I saw many kids checking their phones for the time. These things are more like lifestyle devices than phones. Internet, MP3, IM, and even FM are built into these things. I get nervous when I'm away from my email for a day or so, but these kids visibly suffer when they're forced to turn them off for a 90 minute seminar. Give them a Wi-fi connection and they can listen to streaming audio or watch TV. Much like cable made the differences between VHF and UHF TV go away, the lines between terrestrial and Internet radio are blurring fast.
Of course, one of the more popular seminars was on performance royalties. While I'm not opposed to artists being paid for their work per se, the fees can be out of reach for the little guys. For those who don't know, radio stations (and to an extent, nightclubs, stores etc) pay writers and publishers, not artists. There are 2 bills currently in the House. One would sign into law the current exemption radio enjoys and forbid any new fees or taxes. The resolution reads, "Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings." One hundred and five Republicans and 65 Democrats are now supporting the resolution. Wait..."SHOULD not"? What about "WILL not"? There's a world of difference there. And what,exactly, is a "local" radio station? See my previous "WGOD" post for my take on that. The other would repeal the exemption (thank uber-liberal Pat Lahey of VT for this one) and force heavy fee hikes on precisely the people who can afford them the least-college stations and mom-and-pop local station owners. Clear Channel, Entercom, Saga, etc won't choke on another thousand bucks a year, but try getting another grand from a college thats level-funded you for the last 10 years. ASACP/BMI/SESAC already have a minimum fee that rises as your revenue does. Maybe Soundexchange should consider giving educational and LPFM stations, especially in very small markets, a break by offering an affordable blanket license as opposed to the current clusterfuck of a system involving tuning hours and other dense metrics. Forcing them off the air will bring them less revenue, not more.
First, it seems like every college radio person is a manager of something. One station even had an assistant sports director! Way too many chiefs and damn few indians. Also, almost no one wore a watch. Big deal you say? Maybe, but I saw many kids checking their phones for the time. These things are more like lifestyle devices than phones. Internet, MP3, IM, and even FM are built into these things. I get nervous when I'm away from my email for a day or so, but these kids visibly suffer when they're forced to turn them off for a 90 minute seminar. Give them a Wi-fi connection and they can listen to streaming audio or watch TV. Much like cable made the differences between VHF and UHF TV go away, the lines between terrestrial and Internet radio are blurring fast.
Of course, one of the more popular seminars was on performance royalties. While I'm not opposed to artists being paid for their work per se, the fees can be out of reach for the little guys. For those who don't know, radio stations (and to an extent, nightclubs, stores etc) pay writers and publishers, not artists. There are 2 bills currently in the House. One would sign into law the current exemption radio enjoys and forbid any new fees or taxes. The resolution reads, "Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings." One hundred and five Republicans and 65 Democrats are now supporting the resolution. Wait..."SHOULD not"? What about "WILL not"? There's a world of difference there. And what,exactly, is a "local" radio station? See my previous "WGOD" post for my take on that. The other would repeal the exemption (thank uber-liberal Pat Lahey of VT for this one) and force heavy fee hikes on precisely the people who can afford them the least-college stations and mom-and-pop local station owners. Clear Channel, Entercom, Saga, etc won't choke on another thousand bucks a year, but try getting another grand from a college thats level-funded you for the last 10 years. ASACP/BMI/SESAC already have a minimum fee that rises as your revenue does. Maybe Soundexchange should consider giving educational and LPFM stations, especially in very small markets, a break by offering an affordable blanket license as opposed to the current clusterfuck of a system involving tuning hours and other dense metrics. Forcing them off the air will bring them less revenue, not more.
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