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Troubling headlines for Satellite Radio

Buzz most definitely has two heads, and one of them certainly wears a frown.

And the frown is center-stage lately, with the recent piece in the Wall Street Journal and now a headline in the Hollywood Reporter that reprises talk about the need for Sirius and XM to merge and opens with this:

Pull up the six-month performance of companies making up The Hollywood Reporter/Bloomberg 50 Entertainment Stock Index and a tiny pattern emerges: Dead last is XM Satellite Radio, and third from last is Sirius Satellite Radio.

A merger is a possibility, say the experts quoted in the piece, and I certainly agree. Whether it is likely or not is another question. And there’s also the possibility that a broadcasting company could dive in and add one of the satellite services to their portfolio (assuming there are no legal reasons which would disallow this – and perhaps there are).

For a radio company, it seems to me that it’s an obvious investment in a national footprint, a national identity, and a high quality slate of premium programs mixed in with all the stuff that you can find on radio in one way, shape, or form anyway.

It’s a step up to brands which have positive associations (unlike terrestrial radio corporate brands, which tend to be thought of as the “bad guy”).

It’s also an obvious entre to the fast-moving world of Internet radio.

It would make irrelevant the notion of HD Radio, since this company at least will have their digital radio without having to start from scratch to get it.

Finally, it would provide an obvious outlet for some key premium programming which could appear on radio (or back on radio) for the ultimate right price: free.

I have often complained about radio groups not investing in the companies required to take them to a higher level. Recently one group head asked me to recommend some potential purchases.

Here’s your answer.

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