However, as we near the end of 2007, we seem to be very close to a decision on this event and as I mentioned in an earlier blog, my money now is on the merger getting approved.
The National Association of Broadcasters has done a respectable job of countering satellite radio's rationale in favor of a merger, but the time has come for the NAB to face the "Rule of Consolidation".
The fact is that the NAB has lobbied for consolidation of the radio industry since the early 90's and got permission for radio companies to begin buying up each other in a 1996 act of Congress.
The argument was that not only is consolidation good for the business - it's good for the consumer.
Now, eleven years later, many in our business - even on Wall Street - believe that this wave of consolidation has had negative repercussions on the financial well-being of the radio business.
Again, in the last two years, the major radio companies have been stamping their feet for further consolidation. It seems that owning 8 radio stations in the biggest radio markets wasn't enough. There are those who want to own 10 or more stations in the same market.
Yet when it comes to satellite radio consolidating, the radio industry says "no".
The radio industry is concerned about this proposed merger for many reasons...but none of them are truly onerous.
If the radio industry manages their business properly...
- A merged satellite radio company will not significantly impact its listenership
- A merged satellite radio company will not impact radio's revenues and profits
Bridge Ratings has been studying consumers' reaction to the proposed merger since it was announced in February. Over time and 5 studies, current satellite radio subscribers have become less concerned about the impact of such a merger. Potential satellite radio subscribers are confused, but most will delay their decision to subscribe until a decision is made. This is one reason why year-to-year satellite radio subscriber rates have fallen so precipitously in the last year.
The only negative impact the merger has had on the satellite radio companies is that the news of a potential merger has derailed the sector's growth. That's only temporary.
Satellite radio is a niche business and a merger will not automatically make it a broad-based appeal business.
If consolidation was good for the radio goose why isn't it good for the satellite gander?