Positive signs emerge in XM-Sirius union

Although the National Association of Broadcasters (NAB) and special interest groups fought the merger of XM Satellite Radio and Sirius Satellite Radio, recent statements in support of the merger by Federal Communications Commission chairman Kevin Martin were considered a good sign for the deal.

Although the National Association of Broadcasters (NAB) and special interest groups fought the merger of XM Satellite Radio and Sirius Satellite Radio, recent statements in support of the merger by Federal Communications Commission chairman Kevin Martin were considered a good sign for the deal.

Both XM and Sirius say the union would save them about $400 million annually, helping them manage the significant debt both companies have taken on since their creation.

The long-term question, however, assuming that the combined entity can keep its creditors happy, is the competition it will face from other media, including MP3 players, digital radio, and the emergence of mobile Internet streaming radio. Yet a number of radio industry insiders say the merged entity will have to carefully plan its strategy to compete against new and established technologies.

"As technologies continue to evolve, [including] ones that we don't even know about today, and as more and more people try to improve terrestrial radio, through digital radio and the opening of new space in the spectrum, will that impact satellite radio?" asks Richard Strauss, president of Strauss Radio Strategies. "Sure it will, but satellite radio will still be viable."

XM added about 1.4 million subscribers in 2007, while Sirius gained 2.3 million new subscribers. Combined the two companies have in the neighborhood of 20 million subscribers - numbers that Strauss notes may not match terrestrial radio, but are still significant for advertisers or PR pros looking to reach and influence people.

A representative from XM declined to comment, and Sirius did not respond to requests for comment by press time. However, the companies have positioned their value in terms of sound quality, programming selections, and the signal coverage of satellite radio in their general outreach.

Representatives of terrestrial radio agree that satellite radio has many merits. Chris Berry, GM of Washington, DC-based talk radio and news station WMAL-AM, praises the vast programming available on the platform. Sports such as NASCAR, the National Football League, Major League Baseball, and eclectic and admired radio shows, such as a weekly radio hour hosted by Bob Dylan, are among the choices available on satellite radio that surpass the options on its terrestrial counterpart.

However, Berry adds, satellite radio does not offer nearly as much local programming, such as news, traffic, weather, and sports, as its terrestrial competitor. Nor, he argues, does satellite radio offer the ubiquity and portability of terrestrial radio, which is already available in nearly every car and home for no subscription fee.

However, both satellite and terrestrial radio will likely continue their dominance of the talk-show market for the near future.

Michael Harrison, publisher of Talkers, says that Internet-based talk-show hosts may not truly challenge their radio rivals for five to 10 years, but they will have a sudden impact when they do.

"Streaming on the Internet is an awesome prospect in terms of communications," Harrison says. "It's going to affect everything - newspapers, radio, and television. It's a tidal wave coming... and it will wash away terrestrial radio and satellite radio."

At that time, Web-based broadcasters will have to deal with another distinct advantage possessed by the Web - and one long held by terrestrial radio - that it is largely free to the public, Harrison explains. The public and the PR community, he adds, will both benefit from the abundance of radio entertainment.

"PR people have nothing but good times ahead with this new scene that is emerging," says Harrison.

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