Does Satellite Radio Suck?: Kohl and Karmazin Disagree

by on May 25, 2007 · 5 comments

We suck less,” said Sirius CEO Mel Karmazin to shareholders yesterday at the firm’s annual meeting, comparing the firms dismal performance to that of XM Radio. While perhaps better than sucking more, the statement could not have cheered investors.

Satellite radio investors looking for optimism, would have been better off reading a letter from Senate antitrust subcommittee chairman Herb Kohl, sent Wednesday to the FCC and to the Justice Department. The proposed XM-Sirius merger, he said should be rejected, since there aren’t any competitors to the two. Old-fashioned terrestrial radio, he wrote, just can’t compete with satellite’s “tremendous variety” of formats, “far superior sound quality” all provided on a commercial-free basis. Kohl similarly dismisses Internet radio and MP3 players, finding they also provide no alternatives for consumers.

It must have come as a surprise to satellite investors — who have never seen a profit — that they hold such a stranglehold on the market. It would no doubt be a surprise to consumers as well – hundreds of millions of whom do not subscribe to either satellite service, along with countless others who use iPods instead of radio. These consumers have no alternative to satellite radio service — according to Kohl — they just don’t know it yet.

Unfortunately for any shareholders hoping to start raking in monopoly profits, Kohl is wrong. There is no satellite stranglehold on radio, and no lack of competitors. And that competition will continue — or even increase — if the proposed merger takes place. For U.S. consumers, that doesn’t suck at all.

  • http://nab.org Walt

    If they DO merge just wait and see what happens to their programming and technology development without having each other to compete against. Senator Kohl is certainly right about this much — satellite is a different animal from terrestial and Internet radio. And don’t forget, these two companies promised they wouldn’t merge when granted their licenses in the first place.

    Relevant disclosure: I consult for the NAB, a critic of the merger, so yeah, I think they suck more.

  • http://nab.org Walt

    If they DO merge just wait and see what happens to their programming and technology development without having each other to compete against. Senator Kohl is certainly right about this much — satellite is a different animal from terrestial and Internet radio. And don’t forget, these two companies promised they wouldn’t merge when granted their licenses in the first place.

    Relevant disclosure: I consult for the NAB, a critic of the merger, so yeah, I think they suck more.

  • Scott

    The NAB knows that over a period of time Sat. radio will be a problem for Regular radio.

  • Scott

    The NAB knows that over a period of time Sat. radio will be a problem for Regular radio.

  • ogizi81

    thanks!

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