So last year’s merger of Sirius and XM Satellite radio was supposed to save that particular segment of the broadcast industry. Ain’t happening: Sirius-XM CEO Mel Karmazin sounds positively desperate to avoid bankruptcy, but nevertheless the company’s drawing up the papers to go the Chapter 11 route.
What happened? Lots of things: launching not one, but two, satellite radio networks is hella-expensive. That initial capital outlay has never been recouped. Secondly, Sirius itself bet the farm on talent – the only person that’s made money out of satellite radio is Howard Stern, and he’s been laughing all the way to the bank.
Then, when the merger happened, Sirius-XM stupidly adopted the terrestrial-radio model in order to balance the books: consolidate channels (reducing the choice that, for satellite radio, was the initial attraction for many potential listeners) and add advertising to many (another selling-point that satcasters have now utterly abandoned).
Couple that with the fact that most Sirius-XM listeners get their initial subscriptions for free (usually when they buy a new car with satellite radio installed), the changes the company has made has not compelled listeners to part with their own cash once their subsidized subscription runs out.
Now, the only thing that may save Sirius-XM is a capital infusion from somewhere. And ironically, the company’s looking at satellite television broadcasters for that cash. Some already hold shares in Sirius-XM, so on that front it would seem like asking a fellow shareholder to invest more deeply in the company.
But if that ownership crosses a certain level, there’s the distinct possibility that we might see a de facto monopoly on satellite broadcasting. That can’t make anyone happy – most notably the new FCC – and their plate is full with things like trying to manage the rocky DTV transition.
The outcome of this is not going to be pretty. I am certainly glad that I never did bite on satcasting.
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