February 20, 2007
Proposed Merger Between XM Radio and Sirius
A change in the wind?
As you likely have heard or read by now … on Monday afternoon (February 19) the managements of the two satellite radio companies, XM and Sirius announced a plan to merge the two organizations into one. While most XM subscribers have already received an E-mail message from XM CEO Hugh Panero , and there is a “merger news” link on the XM Radio Home Page – www.xmradio.com - we asked enLighten 34 Program Director Marlin Taylor some questions as to how this plan will affect you, the enLighten listener.
First of all, the question every listener wants answered … what will happen to enLighten, is it likely to go away?
Absolutely not! I am pleased to report that in listenership, enLighten ranks in the top one-fifth of all of XM’s 170 channels … with more than a half-million persons tuning in every week! And, many of “our family” are listening for long hours most every day.
This makes the enLighten body of listeners a serious segment of the total XM subscribership … and management recognizes that a goodly number of you listen to little else in the XM lineup. Add to this the fact that Sirius has no counter-part to enLighten or anything remotely close to it.
Can we expect to hear changes occurring on enLighten or other XM channels in the near future?
No. Even if you do listen to multiple XM channels, the likelihood of you hearing any changes within the next year that are any way related to the proposed merger is virtually nil. This merger must be approved by the federal government and no one has any expectation that final approval can come in any less than nine months time.
Down the road, will I need to purchase a new radio?
If your interest is only in enLighten and, possibly, a few other channels already on XM, it’ll likely be years before you’ll need to take any action. Once the merger is completed and new “combination” radios are available, if you have a desire to hear NFL games or NASCAR as part of your subscription, you then can choose to acquire that new receiver.
When the two companies become one and there’s no more competition between them, can I expect the subscription price to go up or for commercials to be added to XM music channels such as enLighten?
Both managements have publicly stated … acknowledging the competitive environment which now exists in audio entertainment … that they have no plans to increase subscription fees or add commercials to any music channels. At the same time, they spoke of expanding the diversity of programming offered by the combined companies.
While I cannot speak for corporate management, it is my confirmed belief that the biggest change you, the enLighten listener, might encounter sometime in the years down the road is a change in channel number, which could occur at the point when the two channel lineups are melded into one.
After reading the above statements, David Bruce Murray of www.musicscribe.com posed two questions to Marlin as a means of further clarifying statements he made:
DBM: A couple of your statements seemed to contradict each other. At one point you mention that customers might need new receivers in order to get the full combined services of both XM and Sirius. At another point you mention XM and Sirius merging their channel lineups.
Will XM and Sirius merge their channel lineup, and if so, why would a new receiver be necessary?
Marlin Taylor: I’ll attempt to answer this without getting too technical or overly detailed. There are two limiting factors right off in any combining of the two companies’ systems: First, they operate with two very different transmission systems, which complicates the design of a receiver which can pick up both, let alone having current radios for either service receive the other’s programming. Secondly, both systems are max’d out, so they cannot be expanded to include channels from the other company’s lineup.
For instance, for the merged company to deliver Sirius’ NFL broadcasts, something would need to be bumped, the same would be the case if enLighten were to be made available to Sirius subscribers. This limited availability of “bandwidth” allocated to each company by the FCC is what caused so much time to pass before Southern Gospel was added to XM’s satellite lineup – another format had to bumped.
What the press release was trying to say was that existing receivers would not be made obsolete … they still will be able to receive the channels which their present service continues to deliver. At some point, when the companies’ decide to merge their lineup – meaning that where programming is presently duplicated by both parties … mostly in the Country and rock arenas and some news/talk channels like Fox News, CNN (examples only, nothing been determined) … is eliminated, a person’s favorite channel may land on the “other side” of the combined service.
DBM: You quoted some statistics regarding the popularity of enLighten vs. other XM channels, the number of enLighten listeners, the amount of time a listener tunes in vs. switching channels, etc. These stats all sounded very encouraging in terms of enLighten surviving the merger, but I wonder how you arrived at those stats. How does XM know, for example, that Customer A listens to enLighten for two hours before switching over to Laugh USA for 30 minutes while Customer B never takes his radio off of enLighten?
Marlin Taylor: These are legitimate figures provided to XM management by two different research organizations, one being Arbitron, which is the accepted audience ratings service for all of American radio. These two companies survey the XM body of subscribers to determine what they are listening to. The first Arbitron survey following enLighten’s arrival on the satellite service on April 18th came in late June. This report told us that the enLighten audience was geared up and waiting for it, as it showed the channel as already being in the top 20% of XM’s most-listened-to channels … this just 60 days following launch. The latest Arbitron survey showed only a small increase in audience size, but confirmed that the June numbers were not a fluke … and all of this is confirmed by data from the other research company, whose name I do not know.
A key factor is that XM management has now proclaimed enLighten to be a great success story.
One further point …I am amazed at the number of groups who have reported being told numerous times that their recordings have been heard on enLighten and are seeing increased CD sales due to this exposure. Mind you, these are lesser-known groups who’s recordings are only occasionally played. At the NQC, someone told me that “in the five months since enLighten went on the satellite service,” this group (I have no idea who it was) has sold more CD’s than total sales of the previous five years!