It's probably fair to say that Radio Shack and Circuit City are not the first names that leap to mind when it comes to gauging consumer benefits.
But supportive words from the two big electronics retailers and others are being widely touted by XM and Sirius this week as proof positive that the proposed merger of the country's only two satellite radio providers "would result in consumer benefits." (Click here to read an XM/Sirius press release on the matter.)
Don't get us wrong: We cherish our longstanding membership in Radio Shack's battery club and admit we have often found the open box bargains at our local Circuit City irresistible. They are both very good at what they do, which is selling their stuff.
Among the items electronic retailers are selling a lot of these days are satellite radios, all of them boldly emblazoned with either a Sirius or XM logo. The retailers make a lot of money selling and installing those radios -- and Sirius and XM subsequently collect lots of monthly fees to provide programming for those radios.
Those monthly fees have not been sufficient for either company to ever turn a profit, however, which is why they say they now need to be given special dispensation to merge into a monopoly. Many observers have pointed out that those financial woes are due to lousy business moves, such as Sirius's huge, multi-year deal with shock jock Howard Stern.
Circuit City and Radio Shack are not the only business partners whose support XM and Sirius say somehow translates into a clamor of "consumer" backing for the deal. XM and Sirius are also bragging about some auto manufacturers who have hopped on the bandwagon for the merger, including Honda, Toyota and Hyundai.
According to XM and Sirius, here is what it all means:
"These supportive companies have a keen understanding of their customers and drive sales and business by catering to the interests of consumers. Their support sends a clear message that the combined company would be welcomed by the American public."
Consumers Union, the sponsor of this blog, is one of many public interest groups which are opposed to the XM-Sirius merger.
The reasoning is really pretty simple. The deal would combine the country's only two satellite radio providers -- who now compete quite aggressively for customers -- into a government-sanctioned monopoly. Monopolies are not good for consumers. (Click here to get more information on the proposed merger from www.hearusnow.org.)
In an effort to win support for the deal in Washington, Sirius CEO Mel Karmazin has pledged to keep rates low following the merger. He has also proposed to offer tiers of programming at differing rates, instead of an all-or-nothing package. Those assurances have some Wall Street analysts predicting the deal will gain government approval, possibly by the end of the year.
We are highly skeptical of promises from XM and Sirius -- and with good reason. Both companies pledged not to merge when they were granted their licenses to begin setting up their satellite networks in 1997. That should make it pretty obvious that their promises don't mean very much.
Both the Justice Department and the Federal Communications Commission have to approve the merger for it to happen. Congress is also expected to have a say, although it is not part of the official approval process.
As for XM and Sirius, we would like to offer a little bit of advice should they be interested in finding out what consumers really think about their proposed merger: Ask some actual consumers rather than their corporate cronies.
We bet they can find a bunch of them down at their local Radio Shack or Circuit City.
********************************************************************************************************************************
Why Should Consumers Be Concerned About Rupert Murdoch?
Consumers Union Vice President for Federal and International Affairs Gene Kimmelman says Rupert Murdoch and other media moguls are bad for democracy and consumers. Click here to read his explanation why.
________________________________________________________________________________
NEW ON www.hearusnow.org
Click on the links below to view these items recently posted on www.hearusnow.org
________________________________________________________________________________
NEW ON “NOW HEAR THIS”
Click on the links below to view these items recently posted on “Now Hear This”, our blog:
