The Satellite Radio Outrage

Eighteen months after the Sirius/XM merger was announed, the FCC finally approved it.

The entire process was a joke -- and a not very funny one at that.

In a world where the Justice Department allows almost any two companies to merge, for some reason this merger was held to another standard. It was pure hypocrisy at best.

It's as if federal regulators, lawyers, lobby groups and traditional media executives fail to understand that it's over for all of them if they don't change. The next generation is calling the shots now -- like it or not. They have control of the delivery system -- the Internet -- so displays of public outrage like we saw in the extended ramp up to "D" day at the FCC were non-productive.

Consider this:

1. The merger was approved with some conditions one of which was to require the merged satellite radio entity to make 8% of their total channels for educational and minority-owned channels. This is a joke. There are only 18 million satellite customers who make a conscious decision to pay for what they want. Now they're going to get these extra public access channels whether they want them or not. Talk about taking the government off of our backs!

2. The HD Alliance and iBiquity tried to hitchhike on the satellite radio merger to accomplish what they have failed miserably at doing -- that is, getting consumers interested in buying HD radios. Fortunately no stipulation was included in the merger that would require satellite radios to also offer HD technology. If the satellite industry wanted to commit suicide, HD would be the best way. Remember, consumers are paying for satellite radio -- not what iBiquity wants them to have.

3. The NAB which has increasingly been wandering off its mission for the broadcasting industry not only opposed the merger but is still opposing it now that it has been approved. They are promising more litigation to get the ruling overturned. I don't know about you but I could rattle off (and often do, right here) ten or 12 real problems facing the radio business. Satellite radio is not one of them. Satellite radio has its own problems. It's a small business. The merger is only worth $3 billion and change -- a lot less than, say -- the Clear Channel buyout. The NAB continues to embarrass itself and the industry it represents by strategic decisions to waste time, money and goodwill on Capitol Hill when they ought to be focused on preventing repeal of radio's performance exemption and fighting for fair copyright rates for streaming broadcasters. Keep in mind that today's radio companies will be tomorrow's streamers -- or else they're done when terrestrial radio's existing audience passes.

4. The Commission has hit a new low on this issue. The FCC is requiring the satellite operators to build interoperable radios in the future -- that is, radio's that get both XM and Sirius. Let's see -- what does this mean? The FCC required this of the satellite industry when it gave the green light way back when, but they -- the FCC -- didn't see fit to enforce the provision that would provide consumers with radios that could hear the only two satellite radio services. Now, on the backs of the merger, this impotent body has decided to make one of the conditions of merger the exact thing it couldn't or wouldn't enforce in the first place.

5. Some in the radio industry have acted in a petty way during the arrival of satellite radio. The argument was that satellite had audience figures that paled in comparison to terrestrial radio -- very true. But at the same time the radio industry had a sick obsession with satellite -- knocking it, fighting it and needlessly elevating it to a stature it never earned along the way. That's all well and good in the name of pride and competition but it proved to be another nail in the terrestrial coffin as radio broadcasters distracted themselves from the real issue -- loss of the next generation and failure to understand the Internet.

Sirius and XM chief Mel Karmazin has vowed publicly to close this merger the moment it happened.

And who could blame him -- it should have happened months ago without all the "helpful" parties that tried to derail it or profit from it.

Karmazin has his own hands full trying to make satellite radio work in a world where the essential next generation is inclined to wait for free WiFi.

The DOJ recognized these two satellite companies had greater competition from other traditional and new media -- and boy, will they find out how true it is as the one remaining satellite entity must compete with new technology, a new generation and new marketing rules.

Just a decade ago satellite radio was hailed as new media. Today, satellite radio is in the same boat as terrestrial radio -- maybe worse.

Terrestrial broadcasters ought to call Mel and congratulate him on his victory and welcome him to the fight of a lifetime -- trying to make old media act like new media.

In the end it turned out -- for better or worse -- satellite and terrestrial radio were blood brothers after all.

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