A couple updates today on the on-going sagas that are weighing heavily on the audio/video industry - the proposed XM/Sirius satellite radio merger; and the continued format war between Toshiba's HD-DVD and Sony's Blu-ray technology.
Earlier this month, a New York analyst reported the Department of Justice will recommend the merger of XM and Sirius even though there would be a staff recommendation against the deal. Tom Watts, an analyst with Cowen and Company, said he believes the FCC will fall in line with the DoJ recommendation to allow Sirius to buy XM and combine both formats into one.
At nearly the same time, the Institutional Shareholder Services (or ISS), recommended that shareholders of both XM and Sirius vote to merge the two companies. Shareholders are to vote today on the merger and the vote is expected to be overwhelmingly in favor of merging the two.
And last week, the FCC sent both XM and Sirius questionnaires seeking detailed information on the proposed merger. The FCC asked the companies to have the questionnaires returned by this Friday sparking speculation the Department of Justice is close to allowing the merger. If the Department of Justice wasn't going to allow the merger, there would be no need for questionnaires. Given the deadline of Friday for the returning of the questionnaires, it could very well be that the DoJ could allow the merger next week, with the FCC falling in line soon thereafter.
Not everyone, however, is enamored with the proposed merger. The Reverend Jesse Jackson vehemently opposes the XM/Sirius merger saying the merger would monopolize the industry and have the "real potential of eliminating diversity." In a keynote speech at the Digital Hollywood conference, Jackson said it was "time to put some Democracy into the way the FCC does business". Jackson has also testified in front of the FCC against the merger.
And The Washington Post's Marc Fisher said the a ala carte pricing system touted by the two systems would result in less choice over time with higher prices. Fisher said the danger in offering choice packages with fewer channel will shift the bulk of the audience to a handful of channels.
But in an interview last week with the Chicago Tribune, Sirius chairman Mel Karmazin - the man who is spearheading the merger effort - said he would sue the federal government if the merger did not go through. However, I don't think Mel has to unleash the lawyers just yet.
Personally, I'm kind of excited with the prospect for the merger. I see some things on Sirius that I like, and there's some things on XM that I like. It was to the point that I really couldn't make up my mind what I'd rather have, so I just haven't made the choice yet.
Regarding the continuing format wars between HD-DVD and Blu-ray technology, Sony's CEO Howard Stringer said last week the two competing technologies are virtually in a stalemate. The on-going battle between the two camps took a turn earlier this summer when Paramount studios jumped the Blu-ray ship and went exclusively with HD-DVD for their high definition movies.
"We were trying to win on the merits, which we were doing for a while, until Paramount changed sides," Stringer said.
While most of the Blu-ray player sales have been with Sony's Playstation 3, the stand alone Blu-ray machines continue to struggle with price tags that are twice to more higher than the Toshiba-based HD-DVD players. Toshiba recently lowered the price on their HD-A2 player to $199.
And on top of that, Wal-Mart and Best Buy had a special $99 price on the HD-A2's earlier this month. In addition to buying the player at $99, consumers could still get the five free movies Toshiba was giving away with the purchase of one of their HD-DVD players. Whatta deal!
Most of those players are gone now, but Toshiba recently introduced the new HD-A3 player that will have an on-going price of $249. That's still significantly lower than the lowest priced Blu-ray players on the market.
Once again, the only problem with HD-DVD is the lack of titles available. However, with Paramount now on board - along with the likes of Warner Brothers, Dreamworks and Universal studios - we should be seeing more HD-DVD titles in the pipeline by the end of the year. Already, the recent release of the movie "Transformers" on HD-DVD sold nearly 200,000 copies in the first week. That's some pretty significant numbers.
I'm sure the format war is still long from over. But it is rather interesting that Sony's Stringer recognized the fact that no matter how much spin the Blu-ray camp could put on its product, HD-DVD was a viable and formidable opponent to be reckoned with.
As I've said before, stay tuned...
I see where 99.8 per cent of XM shareholders and 96 per cent of Sirius shareholders voted for the merger. I'd call that an overwhelming approval!
Posted by: Bob Akerman | November 14, 2007 at 09:29 AM