We’ve all heard the benefits of a satellite radio subscription. Satellite radio is commercial-free. It offers more than a hundred channels of news, music and sports. Unlike traditional free radio, satellite’s stations won’t fade in and out as you drive across rural landscapes. On top of these benefits, satellite receivers are becoming a standard feature in an ever-expanding range of cars.
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Despite their services’ selling points, XM (XMSR) and Sirius have both had their financial struggles. Some 16 months ago, the rival companies announced a plan to merge. Since then, however, the proposed deal has been stuck in a web of red tape in Washington. In the meantime, subscriber numbers have tumbled – and part of the reasoning behind FCC Chairman Kevin Martin’s decision to support a merger lies in his view that an XM/Sirius conglomerate would not constitute a monopoly since it competes for listeners with traditional AM/FM radio, HD radio, music players like Apple’s (AAPL) and ever smarter cell phones.
The merger, which has already been approved by the Department of Justice, is expected to clear its final regulatory hurdle in July. The deal must adhere to four major concessions, according to reports from the FCC:
1. Subscriptions fees will be capped for three years.
2. The company will set aside 8 percent of its channels, to be leased to non-commercial and minority-owned stations.
3. Licensing of receivers will widen to include more manufacturers, as well as the introduction of interoperable radios, within a year of the deal’s close.
4. Eventually, customers will be able to choose the channels they want through a-la-carte options.
If you choose to subscribe to one of the two satellite radio services prior to the merger, there are several things you need to know before you make your decision:
For about $13 a month, plus $100 or so for the lowest-priced equipment and a small activation fee of about $15, both Sirius and XM listeners can subscribe to their respective services. But there are some notable differences between the two. For example, once you sign up for Sirius, the company will continue to charge your credit card with the monthly/annual fee until you officially cancel. And, cancelling is difficult; while you can subscribe online, company policy forbids cancelling your service online. The only way to cancel is by calling the company’s billing department. You will be charged a cancellation fee if you cancel a one-year or longer subscription during the first year of service. Sirius’ cancellation fee is currently $75. According to XM’s terms of service, there is no extra fee to cancel the service.
XM produces four different types of receivers: home receivers (which range from $170 to $1,000), in-car receivers (ranging from $100 to $170), a personal receiver ($350) and plug-and-play units that work with both home and car audio systems (ranging from $100 to $350). XM is the only company to have a personal receiver – the XM MyFi can hold up to five hours of content and can be carried everywhere, similar to an MP3 player.
Sirius comes in three formats: cars receivers that work with either your car’s existing radio or replacing it (ranging from $150 to $2,300), home receivers that work with either your home stereo or in addition to it (ranging from $250 to $2,000), and plug-and-play receivers that can go from your car to your home as well as act as standalone, portable radios (ranging from $50 to $160).
Sirius boasts itself as the home of wildly popular shock jock Howard Stern. And while both outfits offer multiple music and news stations, they broadcast different sports. For example, Sirius is the exclusive satellite broadcaster of NASCAR, NFL and NBA games. Meanwhile, XM offers NHL and MLB broadcasts.
In the end, both XM and Sirius share similar advantages. Here are five major perks exclusive to satellite radio subscribers:
1. Commercial-free music stations. Since subscriptions provide the biggest source of income for the two satellite radio companies, listeners and not advertisers have the larger say in programming. Both services offer an estimated 70 commercial-free music channels. There are channels for every music taste, from Beethoven to Bon Jovi.
2. No static at all. Poor AM/FM reception is annoying and satellite receptions offers sound quality that isn’t affected by the strength of the signal. However, a week signal increases the chances that the entire spectrum of channels will fall silent altogether. Much of this depends on the quality of the receiver.
3. Title display. Never again will you wonder the name of the band that sings one of your favorite songs. Each song’s information is displayed with satellite service.
4. Uncensored. At a time when broadcast companies have become paranoid while adhering to FCC rules of obscenity, satellite radio is exempt from those rules. Quite simply, Howard Stern is allowed to say whatever he wants.
5. Localized traffic and weather reports. If you’re in a major U.S. city, there are channels on both XM and Sirius that are devoted to providing users with localized updates of traffic and weather, usually every five minutes.
Customers vary in the frequency with which they listen to satellite radio, but one variable remains the same – price. At a subscription cost of roughly $13 per month (excluding equipment and activation fees), the price for a year’s worth of Sirius satellite radio checks in at a discounted amount of roughly $142. For XM, the pricing plan is similar – a year’s worth costs $13 per month, with the 12th month free – equaling the yearly price for Sirius.