Radio Deal Could Face Technical Difficulties

RADIO DEAL COULD FACE TECHNICAL DIFFICULTIES
[SOURCE: Washington Post, AUTHOR: Charles Babington]
Not all forecasts of the XM Sirius merger are rosy. There's regulatory hurdles, as we all know, but even past that, it will be hard for the combined company to deliver the benefits executives are promising. Instead of offering a one-price, all-or-nothing lineup for $12.95 a month -- as both companies do now -- they would offer smaller packages at a lower price and bigger packages at a higher price, company executives said. And shareholders would benefit, they said, because a merger would result in savings by eliminating duplications in programming, marketing and other operations. But both XM and Sirius have huge fixed costs, mainly in multiyear, multimillion-dollar contracts for big-name talent and sports events. On top of that, industry experts say, both firms are straining their systems' transmission capacities even before they try to add each other's content. XM and Sirius typically drop channels when adding new ones, suggesting a filled-to-the-top transmitting system. For example, Sirius recently dropped C-SPAN Radio, a charter channel, because C-SPAN objected to being bumped off the network when Sirius wanted to air sports events.
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/18/AR2007031801147.html
(requires registration)