Satellite Radio's Future Shifts with Merger The Justice Department Monday approved Sirius Satellite Radio's plan to buyout rival XM. Heather Forsgren Weaver, who has been covering XM and Sirius for Consumer Electronics Daily, Communications Daily and Satellite Weekly joins Robert Siegel to talk about what a merger of the two satellite radio companies would mean for consumers.
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Satellite Radio's Future Shifts with Merger

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Satellite Radio's Future Shifts with Merger

Satellite Radio's Future Shifts with Merger

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ROBERT SIEGEL, host:

The Justice Department says it's okay, so now it's up to the Federal Communications Commission. At issue: the merger of XM and Sirius, the two satellite radio companies. If the FCC gives the deal the go-ahead, there will be just one satellite broadcaster. And that prospect has led to some criticism of the deal.

Heather Forsgren Weaver, associate editor of Communications Daily, has been covering XM and Sirius, and she joins us from Alexandria, Virginia.

Welcome.

Ms. HEATHER FORSGREN WEAVER (Associate Editor, Communications Daily): Hello.

SIEGEL: And first, if the merger goes through, as you understand it, would people be able to receive the same programming on the two different kinds of receivers that XM and Sirius use?

Ms. WEAVER: The companies have said that XM customers would be able to continue to receive their XM programming, and will also be able to receive best of Sirius programming. And the same would be true for Sirius customers. They would continue to receive the Sirius programming and then there would also be a best-of-XM option.

SIEGEL: So you're saying, still, two distinctly different methods of transmission but a sprinkling of content from one to each of the other.

Ms. WEAVER: Initially, yes. Eventually, the companies proposed to do an a la carte option, where you would get programming from both systems. But that will take a different and new radio.

SIEGEL: The numbers for these two companies are interesting. XM, I've seen, has about - is at about 9 million subscribers, Sirius: 8.3 million. XM had a net loss of $682 million last year, and Sirius had a net loss of $565 million. Why wouldn't a merged company have 17 million subscribers and lose $1 billion every year? What's the argument for synergy here between these two companies getting together?

Ms. WEAVER: The argument is exactly that. That you would no longer need two jazz stations, you know, two full sets of children's programming, for example. You would save money by cutting out all of that duplication.

SIEGEL: But, of course, simplicity in that is to say that there will be less choice among offerings of jazz programming or children's programming or whatever with the merge XM-Sirius, if the merger is approved.

Ms. WEAVER: That would seem to be the truth, except what the Justice Department found and what the companies have long argued is you have a whole range of choices outside of satellite radio.

SIEGEL: Have people talked about if there is indeed a single company, it, perhaps, might have to be regulated in ways that over-the-air broadcasting is regulated, more like that, because there is something that is at least potentially, if not plainly, a monopoly at stake.

Ms. WEAVER: Certainly. Opponents of the merger have called for conditions that even this morning Wall Street analysts were calling poison pills. One of those conditions would be an indecency condition.

SIEGEL: You mean the FCC would catch up with Howard Stern on satellite radio, is what you're saying?

Ms. WEAVER: Exactly. Exactly. And the satellite radio operators have both rejected that.

SIEGEL: Other conditions that might be attached to the merger?

Ms. WEAVER: There have been several conditions proposed. One would reserve certain amount of channel capacity for nonprofit or educational purposes. Another is to lease capacity and infrastructure to a third party to come up with a competitor.

SIEGEL: You mean to create space for competition even within this single system that would be operated after the merger?

Ms. WEAVER: Yes.

SIEGEL: Well, Heather Forsgren Weaver, thanks a lot for talking with us about it.

Ms. WEAVER: Thank you.

SIEGEL: Heather Forsgren Weaver, who is associate editor of Communications Daily, talking about the proposed merger, now approved by the Justice Department but awaiting FCC approval of XM and Sirius.

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