Friday, January 12, 2007

Kostigen Comments Against SDARS Merger

January 12, 2007

Below is commentary that argues against a satellite radio merger. As we have stated, merger has center stage, and will continue to have it until the conference calls unless something bigger can topple the issue from the satellite radio headlines.


XM-Sirius merger a bad idea
Commentary: Monopoly never benefits public or, ultimately, investors

By Thomas Kostigen, MarketWatch

Last Update: 8:38 AM ET Jan 12, 2007

This update reflects the latest subscriber numbers for Sirius and XM.

SANTA MONICA, Calif. (MarketWatch) -- Talk of merger talk between XM Satellite Radio and Sirius is rampant, sending both stocks higher on the chatter. But this is shortsighted muse.
The Federal Communications Commission won't likely allow a merger between the satellite radio media companies. As well it shouldn't.

Sure the deal makes sense for investors and would save an estimated $7 billion in costs between the two aspirants for satellite radio domination. The problem is that they are the only two aspirants for satellite domination. Give us one, and you can be sure it will take all. That means subscribers will take a beating and service will flag.

Competition, defined in Business 101, is good. Monopolies aren't. Well, monopolies aren't good for customers; they're great for investors short term. This is what the FCC should be focused on: what is good for the general public, not what is good for the investing public. They are two very distinct things whose lines can be blurred with glaring consequence.

Ask any one living in California during the rolling electricity blackouts of 2001, and they would probably steam. Ask any investor in the company responsible for the rolling blackouts at the time, and they would probably cheer. Service was down, but the stock price was up. People were at the mercy of a company that monopolized its position in the utility sector at the time. That company was Enron.........

Interested SSG readers can catch the entire article HERE via MarketWatch

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1/12/2007 08:56:00 AM

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