What happened to the ‘winner take all’ attitude? Where’s the competitive spirit? Doesn’t an intense rivalry mean anything anymore? Is the corporate world turning into milk toast?
What has sparked all these questions is the proposed merger between Sirius Satellite Radio and XM Satellite Radio. It’s the straw that broke the camel’s back for me.
I find business executives and Boards of Directors are getting awfully quick on the trigger when their company runs into a tough patch. Companies that are struggling don’t lock themselves in a room for a week and revisit their strategy, personnel and execution. Instead, they lock themselves up with their investment bankers to figure out how to get the most value for the company … now.
In the Sirius/XM situation, it’s easy to point to large losses and disappointing stock prices, but I still think this merger (if it’s allowed) is a huge copout. Satellite radio is a young business which was expected to lose money for a number of years. The cell phone industry lost money for a long time before it became the cash cow it is today. Everyone knew that to build awareness, the companies would need to do some uneconomic things like sign Howard Stern and Oprah Winfrey to ridiculous contracts. The first contract that the Fox television network signed with the NFL was a huge loss leader.
This is an industry that is still at the ‘early adopter’ stage of development. And yet the two companies (two, not eight) have 14 million subscribers. And they have their receivers going into most new cars sold. How powerful is that? It sounds like a pretty good growth profile to me.
If I was the FCC or CRTC, I’d throw this merger back at the companies’ and their investment bankers. They were duped by Sirius and XM and there’s no need for this merger. Indeed, if the merger is turned down, I bet there will be private equity investors lined up to invest in this sector.
Where is the entrepreneurial spirit at one or both of these companies? Don’t they want to bury each other? Has anyone thought of going a different strategic route – e.g., reallocate Howard or Oprah’s money into other market initiatives or subsidized handsets?
As the corporate world loses its gumption, I wonder if professional sports are far behind.
Perhaps the Flames and the Oilers should propose a merger … or maybe the Yankees and Red Sox? Just think of the cost savings …