More “Fool”ish analysis on XM/Sirius

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Motley Fool has been pushing the XM/Sirius merger for months now, and although many see the imminent possibility of FCC approval in the wake of FCC Chairman Kevin Martin’s announced blessings, the Fool still sees potential pitfalls, even if the merger isn’t buried under a mountain of onerous conditions — like anywhere from 20%-50% of channel capacity being earmarked for nonprofit and minority programming, as requested by a growing number of Democrats and minorities.


Among the possible traps: Failure to come up with financing, even with FCC approval; the rapid demise of one of the services in the event the FCC turns the merger down, due to poor automobile sales; or further delay, with the same plunge of one or the other service into bankruptcy.

The Fool blames a bad economy high gas prices for a lot of satellite’s current woes – the economy is holding back auto sales, where much of the satcasters’ new customers are generated; and high gas means less driving, hence less consumption of satellite programming and less impetus to sign up.

As for bright rainbows ahead, it suggests that the gas prices may drive many to ditch their old gas hogs for more fuel-efficient wheels, giving the companies, or merged entity, another crack at new subscribers. And it notes that the “value proposition” will get a shot in the arm once the merged entities roll out half-price a la carte options.

RBR/TVBR observation: Let’s think about that last observation for a moment. Offering value in the form of a la carte will be a great way to increase subs, says Motley Fool. Then why are these allegedly competitive companies not already offering a la carte? The apparently deliberate failure to effectively compete with one another is evidence of collusive behavior. Another is the failure to offer interoperable receivers; and yet another is striking exclusive deals with various automakers, making it very difficult for a car buyer to make an honest choice of one service or the other, in essence divvying up the market. The mystery remains why DOJ elected to reward these and other transgressions with a government-sanctioned monopoly that supposedly was prohibited at birth. Let’s hope the remaining four FCC commissioners opt to uphold the spirit of the law and vote down Kevin Martin.

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