Sunday, March 8, 2009

XM Radio, Sirius Radio and "The Merger"

Back in 1992, the FCC gave way to a spectrum in the “S” band for nationwide broadcasting of satellite based Digital Audio Radio Service (DARS). At the time, only four companies applied for the license to access the particular band, two of which were granted in 1997. Then, in September of 2001, XM Satellite Radio (formerly American Mobile Radio) was the first satellite radio company to “test the field.” With the success that XM showed, a second satellite radio company, Sirius Radio, made the charge and tried to become a big contender in the market.
XM Radio offered roughly 140 channels ranging from various music channels, sport, news, and entertainment channels, to play-by-play sport channels. A big marketing strategy that they used was to make sure to give their subscribers a vast array of options of XM receivers to choose from. Their big three were: the plug-n-play receiver, the boom box style receiver, and the standard in-dash receiver. XM was also the first to market their product in airplanes and car rental companies. I think this was a very good idea because of the amount of people that travel, just on a given day in the United States.
Sirius Radio entered the satellite radio business with a little different marketing mindset. They were more concerned with getting new customers and “switching customers” through the signing of big names. Some of these names included Martha Stewart, ESPN radio, and E! Entertainment. Although their marketing strategy proved to be effective, they still trailed XM in just about every profitable category. Then Sirius introduced what is known as “backseat TV.” This gave all Sirius Radio subscribers access to the three major “child networks” which included Cartoon Network, Nickelodeon, and the Disney Channel.
With the advent of the mp3 player, then the iPod, then the iPhone came the decrease of subscribers to satellite radio. The two major companies saw a tremendous decline in profit in this time and they had to act quickly to prevent any more future losses. What they decided to do was to merge in hopes of minimizing their losses and maximizing their strengths. Although there were many negative factors associated with this merger, the FCC finally approved, stating that it was in the public’s “best interest.” Overall, the merger was beneficial to both companies, XM Sirius Radio is still losing money every day and will have to act fast to get the company back on its feet.
So how exactly has older media served as a template for a Wireless Culture? I believe that every sort of form of entertainment has based its strategy from how radio first started. This includes everything from broadcasting, to marketing, to sponsorships to name a few. Radio started out as a huge piece of equipment that was hard to transport to a device so small but so developed, that it can be programmed, specialized, plugged in to cigarette lighters to boom boxes, and now heard via the internet.

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