Twin Falls, Idaho is the 192nd television market and, for many years, had only one station. A good friend of mine with a long commercial television history once described it as a place where one station would do well, but two would starve. His remark reminds me of the satellite radio industry, which has had Wall Street woes over the past year, fueling talk of a merger (see Analyst Asserts: Strong Chance of XM-Sirius Merger in Next 18-Months). In my view, satellite radio faces its own disruption from Internet radio -- perhaps through a HDR-IPR hybrid that could make terrestrial broadcasters into direct competitors.
Daniel Gross thinks both companies could lose. Writing in Sirius Pain: XM and Sirius Could Both Lose the Satellite Radio Wars, he follows a good economic analysis of satellite radio with:
... The business models of expensive talent, discounted subscriptions, and heavy marketing clearly aren't sustainable for too much longer. And so it's not surprising that analysts have begun to speculate about a potential merger. A merger of equals is certainly possible, though not likely given the egos involved. More likely is a situation in which one falters significantly and the other pounces for an acquisition. A third possibility, which analysts seem unable to contemplate, is that both could fail, and somebody else could end up with both of their carcasses. ...
Link: Slate. Thanks to John Proffitt (KAKM/KSKA) for a tip on the Slate article. --Dennis