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XM + Sirius = Good Deal (for the Companies and Consumers)

2007; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.976759

1556-5068

Adam D. Thierer,

Digital Platforms and Economics

Satellite radio competitors XM and Sirius recently announced their intention to merge their companies in a $13 billion deal. Recent financial statements show this merger is necessary. Although both stocks grew steadily through October of 2004, they hit a plateau after that and then began a steady decline. The cost of signing big name talent and big sports leagues has added significant debt. Merging the two companies could help bring those costs down over time by making those programs available to a broader subscriber base. At a minimum, the relevant market in this merger review should include all the potential sources of audible information / entertainment that are competing for our ears. Indirect competitors that threaten its long-term survival, including: broadcast TV, cable TV, satellite TV, DVDs, video-on-demand, online newspapers, the endless array of magazines, Internet websites, search engines, computer software, video games, and so on. Because of the entertainment and media competition, it is questionable whether the satellite radio sector could sustain two healthy competitors. Once transition issues are settled, subscription prices would not elevate dramatically in light of competition from other entertainment media.