Reality Check | Ephraim Schwartz » Will merger of Sirius and XM radio be renamed S&XM?

February 20, 2007 | Comments: (0)

Will merger of Sirius and XM radio be renamed S&XM?

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I don't care if the new name for a merged Sirius and XM satellite radio is something like S&XM, its future is still doomed.

The news that XM satellite radio and Sirius satellite radio want to merge should come as no big surprise.

Despite XMs claimed 7.6 million subscribers and Sirius' 6 million, neither company has a made a dime. In fact, Steven Schwankert of IDG News Service reports that Sirius lost $1 billion last year on revenues of $1.5 billion.

The question is can two losing companies make a winner?

Under normal business conditions you might think yes. Once the infrastructure is paid for, duplication of operations and marketing are streamlined into a single platform and a single marketing message all the while subscriptions to the service keep climbing, it should over time become profitable.

However, the fly in the ointment is in this case Internet radio. While not a major force today, I see it evolving into a powerhouse as technology catches up to the concept of radio over IP.

First of all, the biggest audience for radio of any kind is during the work day while sitting at your desk. Why pay for that when you can just as easily tune in to the dozens of choices over IP with a high speed connection?

If drive time takes up another major slice of the listener audience Internet radio becomes a bit more problematic for now.

But think about where it is going. Either Wi-Fi or WiMAX in the car and access points along the highway and who needs to pay for a subscription?

Over time the promise of a mesh architecture where listeners' IP radio hops across the access points built into each vehicle to maintain a steady signal will mean the death knell for satellite ra-dio.

I think satellite radio was a good idea but it is a generation too late.

Posted by Ephraim Schwartz on February 20, 2007 10:10 AM

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