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Brian R.

2 years ago

in National Association of Broadcasters v. National Association of Broadcasters on The Technology Liberation Front
You are correct. They would join from a duopoly to a monopoly. They would have explicit pricing powers to raise prices as high as they want.

Except for one fact: They are competing against free. All of the alternatives to Satellite Radio: HD Radio, iPods, Terrestrial radio, internet radio (in areas where city/county wide WiFi is available) are all alternatives to SatRad. While none of them may be nation wide, they are all alternatives. And they are all free, minus the initial cost of equipment.

How about this fact: This all powerful monopoly that you keep saying the merger will form will host a grand total of about 3% of the listening population? How about the fact that they will command a whooping 7% of sales revenue for the radio industry if placed in the same category of terrestrial radio.
I am an XM subscriber and I cant wait for the merger to go through. But what if I am wrong? What if Mel Karmazin's diabolical scheme to charge $50 a month comes true? Simple: I cancel and switch back to either my iPod or terrestrial radio, both of which are free. Satellite Radio is not a necessity and when they raise their prices, people can and will switch to free alternatives. Why do the anti-merger people not see that?

Besides, with an estimated 3-7 BILLION (thats right, with a B) in merger synergies (that means money the combined company will be able to save as a single company) they do not NEED to raise prices to make money.
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