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Focus on: Proposed Sirius-XM merger – part three January 1, 2007

Posted by William Spear in >> Focus on ..., >> Out Basket.

Perhaps we at Lit Between the Ears are addled with too much Korbel Brut and Bushmills Irish Whiskey. (Original, of course.) Both of which are excellent New Year’s Eve libations.

But even a potential fog from such superb liquors cannot override the sketchy logic of a Sirius-XM merger as espoused in Eric A. Taub’s “Loaded With Personalities, Now Satellite Radio May Try a Merger” (New York Times; January 1, 2007).

Quoting Mr. David Frear, chief financial officer of Sirius, in Taub’s article, “When you have two companies in the same industry, we have a similar cost structure. Clearly, a merger makes sense from an investor’s point of view to reduce costs, and to have a better return.”

Clearly makes sense? For whom? Mr. Frear, please accept this as an introduction to Mr. Nate Davis, president of XM, whose thoughts on satellite radio’s slowing growth, in the same article, are as follows: “We did not stimulate the market with new products.”

In the realm of understatements, Mr. Davis has just secured a Nobel or Pulitzer.

Mr. Taub writes: “Yet the vast majority of programming remains duplicative.” Your award is next to that of Mr. Davis.

However, our skepticism does not end there. Cue up Mr. Craig Moffett, senior cable analyst at Sanford C. Bernstein and quoted in the same article. What is your assessment of Sirius and XM, Mr. Moffett?

“There is a tendency to view satellite radio as if the glass is half empty, and that it is a failure or disappointment. In fact, nothing could be further from the truth. Satellite radio is growing faster than any consumer product except for the iPod.”

How about a couple of data points Messrs. Taub and Moffet. What’s your baseline? What’s your time sequence? Furthermore, what are your data sources?

From our New Year’s Eve perspective of radio drama and the possible outlets to support the same, a proposed Sirius-XM merger has all the allure of room temperature, flat champagne.

Radio fans and radio drama professionals deserve better.

Kind regards,

William Spear
Publisher and Editor
Lit Between the Ears

Two Plus Plus Productions LLC

PS – Please note Mr. Frear’s thoughts on satellite radio: “Every year, satellite radio just sinks deeper and deeper into the public consciousness.” We think he could have put a period after the second “deeper.”

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