Research Firm's Thoughts On Satellite Radio Flip-Flop After NAB Pays Them

from the full-of-it dept

Wed, Apr 4th 2007 2:35pm — Carlo Longino

We noted yesterday a new report saying that a merger between XM and Sirius would be bad for consumers. It was being played up because the firm behind it, The Carmel Group, wrote a similar report a few years ago about the proposed merger between Echostar and DirecTV, which it says played a significant role in getting that deal blocked. What was a little bit more telling about the supposedly independent report was that it was paid for by the National Association of Broadcasters, the group representing terrestrial radio owners that's using plenty of shady techniques in its fight against the satellite radio merger. A key part of the Carmel report and the NAB's position is the assertion that the two satellite radio companies only compete with each other, and not with other forms of audio entertainment (terrestrial radio in particular), though the more the NAB beats its chest, and the more loudly it objects to the merger, the more this claim is undermined. Now, as if Carmel's credibility wasn't questionable enough, the folks over at Orbitcast have dug up an October 2005 report from the firm -- written by the same person, no less, but not apparently not paid for by the NAB -- that takes the exact opposite position.

From the new, NAB-supported report:

Sirius and XM make an argument that is critical to the success of this proposed merger. They state that their competitive landscape presently includes all forms of terrestrial radio (i.e., analog AM and FM, digital HD and Internet radio), as well as digital services such as MP3 devices and music-to-cellular telephones. This position is ludicrous. In fact, nothing could be further from the truth.

Now, from the October 2005 report the NAB didn't pay for about the wide array of competition satellite radio faces:

Jump forward another 10 or so years and today the U.S. is pitched in a new battle over the same kind of telecom development, where again, the pie grows and numerous competitors thrive, side-by-side. In this case, the new player is satellite radio, with more than seven mil. subscribers, and its competition comes in the form of traditional analog AM & FM radio, as well as burgeoning services like MP3 players, terrestrial radio, and video- and Internet-to-the-vehicle.

So which is it, Carmel -- or does that depend on who's footing the bill? This sort of shilling is par for the course with the NAB, who's also hired John Ashcroft to lobby for it, but only after XM denied his sales pitch.

It's probably worth clarifying the general feeling about the XM-Sirius merger here at Techdirt Towers. We're skeptical that the merger would really help the two companies, and we don't particularly care whether or not it does. What we can't abide by, though, is the NAB's behavior, because it's so symptomatic of the way entrenched industries try to restrain and inhibit new competitors. Rather than competing in the marketplace, they use political influence and shady PR tactics to try and hamstring upstarts and rivals. It's preposterous that a group like the NAB can act like it's this great consumer watchdog that wants to promote competition in the marketplace when its very actions make it clear that the last thing it wants to do itself is compete. If the NAB really was so concerned about competition and ensuring that consumers benefit from it, it would welcome satellite radio and all other competitors as further motivation to improve its own product and further satisfy consumers. But that's the last thing terrestrial radio, or so many other entrenched industries, want -- hence the deplorable, dishonest and underhanded tactics.

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22 Comments

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PNess, 4 Apr 2007 @ 2:52pm

thank you
:)

so great what money can buy..

someone integrity.
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EJ, 4 Apr 2007 @ 3:40pm

Spot On
Competition is what drives innovation and expansion of the market. Unfortunately, like many other sectors, the NAB believes that because it is the biggest player - it should be the only player. They always seem so shocked when the ratings come in and the lost share. They find it hard to believe that people no longer want their cookie cutter product. While I too wonder about the viability of the merger between XM and Sirius - I still prefer listening to that rather than anything on the terrestrial bands.
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Oliver Wendell Jones, 4 Apr 2007 @ 4:39pm

Why I didn't buy a satellite radio
I went to the store to look for a satellite radio. I found out that each operator (XM and Sirius) subscribe to the "walled garden" school of business where certain shows are only available on one of the two services.

This is another VHS vs Beta, DVD-R vs. DVD+R, Blue-Ray vs. DVD-HD battles where a group of early adopters end up getting screwed in the long run when the market goes the other way.

I couldn't bear the thought of being stuck with the non-winning provider (again!) and so I bought an iPod instead and filled it up with a slew of free podcasts which covered much of the same topics I wanted to listen to on satellite radio in the first place...
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Anonymous Coward, 4 Apr 2007 @ 4:45pm

Re: Why I didn't buy a satellite radio
Oliver, I have made an oath for myself. I invite you to join me. I have sworn that no matter what I do in life, no matter what my scope of power or influence or capability, I will never enter an agreement which intentionally creates exclusivity or restraint of trade, or as you say, a walled garden. A fellow can tell you all day long about how its smart business. And I will simply call him an asshole.
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Brad, 4 Apr 2007 @ 4:45pm

Re: Why I didn't buy a satellite radio
I understand your point Oliver. If this merger were to happen, then you would have another alternative to the iPod. Satellite radio wouldn't be a "walled garden" because all the current XM and Sirius content would be available to a subscriber of either.
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EUGENE GALLEN, 4 Apr 2007 @ 4:55pm

CARMEL REPORT
WAY TO GO YOU CANT BUY PUBLICITY LIKE THIS THANKS NAB
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Lavi D (profile), 4 Apr 2007 @ 5:13pm

Give Some Feedback
I went here:

http://www.nab.org/AM/Template.cfm?Section=Contact_us&Template=/CM/GuestComments.cfm

and left this message:

"It's preposterous that a group like the NAB can act like it's this great consumer watchdog that wants to promote competition in the marketplace when its very actions make it clear that the last thing it wants to do itself is compete."

You should be ashamed of yourselves.

http://www.techdirt.com/articles/20070402/210449.shtml
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Mark, 4 Apr 2007 @ 5:14pm

NAB president David Rehr has stated that satellite radio is competition. From his speech:

The Future of Broadcasting
The National Press Club - October 4, 2006
Remarks of David Rehr, President and CEO, National Association of Broadcasters

"But even with all of these expanded business opportunities, we must address new competitors.

Who are the newer competitors? ... On the radio side, we have SATELLITE RADIO, Internet radio, iPODs, other MP3 players, cell phones and others. How will we compete?"

http://www.nab.org/AM/Template.cfm?Section=News_room&TEMPLATE=/CM/ContentDisplay.cf m&CONTENTID=6937

The link to this transcript was on the NAB homepage until recently. I suspect removing it had to do with Sirius' comments to the Carmel Group:

"The NAB and its members say one thing when they try to block the Sirius-XM merger but something entirely different when (NAB Chief Executive) David Rehr speaks to the NATIONAL PRESS CLUB, Clear Channel speaks to its investors, or the HD radio alliance boasts about its advantages on its website," the companies said in a joint statement.
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Question, 4 Apr 2007 @ 5:54pm

Question
I have a question.

In the past, when cars came out and buggy manufacturers went out of business, VHS tapes went out of style, Walkmans stopped selling, etc. etc. etc...
did the same thing happen? Were the companies allowed to stop progress and competition, and kick up a fuss in the courts? Or did they just die quietly?

I'm just curious and too lazy to do the research on my own.
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PNess, 4 Apr 2007 @ 6:24pm

mark do you have a full copy of that transcript?
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Mark, 4 Apr 2007 @ 6:40pm

Re: Link to David Rehr's National Press Club trans
PNess,

Here is a URL to the transcript, still hosted on the NAB server:

http://www.nab.org/AM/Template.cfm?Section=News_room&TEMPLATE=/CM/ContentDisplay.cfm& amp;CONTENTID=6937

The link from their homepage was removed recently. Also, you can't find it by using their search. I'm surprised it is still on the server...
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steve, 4 Apr 2007 @ 7:34pm

radio
Radio as we knew it is dead. Take it from a broadcast engineer. radio used to be FUN, interesting LIVE. now its canned dead and boring. Hail the XM merger.
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jimmy, 4 Apr 2007 @ 8:34pm

Carmel Flip-flop
Mel should use some of his marketing budget to run full page adds in print exposing the paid shills at Carmel and personally hit the talk show circuit with power point presentation and burn those Goobs at Carmel to the ground...Long Live the NEW XM
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Yoda, 5 Apr 2007 @ 2:13am

Business cycles
'Question' asked:
"..when cars came out and buggy manufacturers went out of business, VHS tapes went out of style, Walkmans stopped selling, ...were the companies allowed to stop progress and competition, ... Or did they just die quietly? "

What does the incumbent do when faced with a newer, better technology/business model? For one thing, they are often locked into the old mode by virtue of having a huge asset base (in this case, radio broadcast equipment and studios etc.). So adopting the new technology and competing on those terms is rarely a viable path. So at first they ignore the problem and hope it goes away. Then as the steady trickle of customers out the door (figuratively) becomes a flood, behavior becomes more and more desperate. Lowering prices is frequently one of the responses, but this rarely succeeds because the new technology usually has a lower cost basis. In the case of radio and broadcast TV, they make the content more sensational (have you noticed that, versus 10-15 years ago?) And they make a strong bid for regulatory protection, if there is a way to do it. The end comes in many forms.. bankruptcy, buyout, or even fraud. Broadcast radio may be granted some protection due to public safety concerns, also. I certainly can't predict.

If I owned radio assets I would sure be looking at how to repurpose the spectrum and assets for something new like mobile video, LBS, etc.
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Anonymous Coward, 5 Apr 2007 @ 4:31am

Right now the difference between Sirius and XM is that XM runs commercials. Even though subscribers have to buy their proprietary radio equipment and pay a monthly fee to listen they still run commercials. A friend of mine who has XM called to complain and was told "well, we need to eat too." If the merger goes through and XM/Sirius whatever it calls itself decides to run commercials then I'll be cancelling my subscription. About the only reason I listen to satellite radio is the lack of commercials. The wide variety of music is a big reason but if all the channels start running ads like FM that will essentially cancel that out. I've had Sirius for about a year and have listened to Howard Stern twice, and for what they're paying the twit they can ditch him for all I care.
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billy, 5 Apr 2007 @ 5:34am

At least
XM and Sirius have a clue as to what their area of business actually is.
Audio entertainment.
If only more companies knew what area they were in instead of having such a limited view.
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billy, 5 Apr 2007 @ 5:36am

Re #1
The things money can buy ... like politicians?
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Amazed, 5 Apr 2007 @ 7:03am

Re: Why I didn't buy a satellite radio
Oliver, let me get this straight. You dont like walled garden school of business so you didnt get a satellite radio, but you bought an ipod instead?!?!!

Do me a favor take some of your itunes purchased songs or free downloaded itunes podcast and play them on another MP3 player.
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James, 5 Apr 2007 @ 8:55am

I love satellite radio
Did I think I'd ever pay for radio in Oct 04 when I bought my Acura? No.

Do I? Yes. Why? Easy... its 100x better than the crap they play on FM anyday, and I don't have to fool with CDs in the car.

Its amazing, a truly awesome offering even if some of the channels run commercials, its still better than FM radio any day of the week.

If these two companies want to merge, as a stockholder, I support them.
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Jimmy VanDino, 5 Apr 2007 @ 9:59am

Sirius has plenty of commercials
To #15...I'm a Sirius Radio subscriber and I can assure you that Sirius runs *plenty* of commercials...just not on the music channels. The talk and many news channels runs ads regularly. Personally, I don't mind it too bad because the programming is good. I look at it much the same as I do satellite TV...I buy their proprietary equipment and pay them a montly fee and they also show me ads. I'll often just flip to another station if I don't want to watch the ads.
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Oliver Wendell Jones, 5 Apr 2007 @ 3:46pm

Re: Re: Why I didn't buy a satellite radio
Golly gee, Amazed...

What do you know, but all those free podcasts I downloaded are in [gasp!] .MP3 format and they play on any MP3 player - at least any MP3 player big enough to hold them.

People like you like to bitch and moan about the lock-in with iTunes, the iTunes Music Store and the iPod, but know what? I've had an iPod now for 2 years and I have a total of exactly THREE music tracks that I've purchased through iTunes that I can't immediately transfer to another MP3 player - I have to go through all the effort of burning them to CD, ripping them as MP3s and then do what I like with them.

Those 3 tracks compose approximately .0006% of my music collection of over 5100 tracks that I've legally purchased on CD (of which more than 75% came from used music stores), so if I ever had to leave iTunes and my iPod behind, I'd be out $2.97 and 3 songs, and that's not enough for me to lose sleep over.
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Garfield, 6 Apr 2007 @ 1:29pm

Re: Re: Re: Why I didn't buy a satellite radio
You're an idiot. And you people complaining about the commercials are idiots too. XM doesn't run commercials on their music channels, Clearchannel does. They own those channels, XM took them to court for years over running commercials. Clearchannel won the court case and started running commerciials. It was in the news. The guy bitching about commercials on CNN is the biggest idiot of all. What's CNN's audio come from? TV dumbass. Do you think they would just go silent while the TV channels go to break? Use common sense.
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