 Bob Bellin on the satellite radio merger ·Aug 6, 04:04 PM The radio industry fought the Sirius/XM merger with everything it had and threw the kitchen sink at it – millions of dollars, lobbyists, What’s odd to me is that it seems so obvious that had the merger NOT been approved, there would probably be more listener defections to Satellite radio, not less. And the radio industry should know that better than almost anyone. Why? Let’s start with some marketing/programming basics. The more products in a category, the more consumption naturally occurs in that category. In radio terms, if in a market with two country stations one flips format, the odds are almost 100% that overall country shares in that market will drop. Doesn’t every executive in radio know that? So two radio satellite services would probably, just for that reason alone, attract more subscribers than one. But there are other reasons. Let’s start with capital. If the merger had not been approved, Sirius and XM would have likely been forced into some form of bankruptcy, which would have canceled out much or all of the big payments both companies had looming in the next 18 months. The result would have been two recapitalized companies that would retain their subscribers, but not the debt. So the marketplace would have two cash neutral (at worst) companies with nice sized subscriber bases, little or no debt and a chance to spend some real money on product development. Compare that to the current situation. One merged entity that is now on the hook for BOTH company’s combined debt and will be faced with cost cutting, engineering and regulatory pressures galore. Yes, there will be some inducements for new subscribers such as all of the sports and personalities offered by both XM and Sirius in one service and a la carte pricing options. But with subscriber growth rates falling for both companies, it seems unlikely that such would have more impact on terrestrial radio defections than two healthy, recapitalized companies with all of the existing subscribers and a fresh start. If you were a terrestrial radio operator, who would you rather face – one competitor who pledged aggressive cost cutting that’s dealing with enormous pressure to follow through on that pledge, or two with no such pressure? Now toss in all of the regulatory hoops and the need to introduce a combined receiver on a deadline. I’d rather fight the one expense cutter with the FCC breathing down their neck, not the two with a new lease on life. There was another downside to radio’s all out fight against the merger. A declining business perceived (correctly or not – it doesn’t matter in the PR world) as something of a dinosaur, has lost a very public battle to a newer technology. This strikes me as a Public Relations nightmare and one that will serve to reinforce the perception that radio is out of touch and fighting progress. Of course, it could be argued that radio IS out of touch and fighting progress and that those are the very reasons it picked the wrong fight against the XM/Sirius merger, but that’s a subject for another column. Terrestrial radio’s fight against the inevitable Satcaster merger should probably never have been waged, but this is one fight they’re probably lucky to have lost. Two re-energized, restructured competitors would have probably been rougher competition than the one, debt-ridden one that lives on. Of course there are those that say one should never count Mel out – time will tell if they’re right! - Bob Bellin share: del.icio.us.  Reddit  Digg  Yahoo  Wink  Windows  Google  Newsvine 
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PR onslaughts, blog posts, you name it…and they lost. They should be glad they did.
