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In the midst of all of the “print is dead” stories that the media harps on about (”look at our jobs disappear!”), Conde Nast has bucked the trend and launched a high-end business magazine called Portfolio. Announced 18 months ago with a launch price tag nearing $100 million, the new magazine aims to be the Vanity Fair for the business set.

The website is excellent and contains every article in the print version plus exclusive online content. The design is crisp and definitely appealing. Though, I don’t understand the “beta” tag unless it is some sort of dig at websites that stay in beta forever *cough*Google*cough*. Conde Nast plans to fully leverage their other titles for cross-promotional opportunities (best places to stay for business travel, etc…).

The articles from the initial issue include a close look at Ford family and Tom Wolfe taking on the new Masters of the Universe (a take on his original article twenty years ago).

There’s no doubt who Conde Nast is aiming for with the new glossy. Forbes and Time Warner’s Fortune magazine are clearly in the crosshairs. Other business magazines like BusinessWeek will probably suffer less because they are more news and less story driven than Forbes and Fortune.

Right now, you can subscribe to Portfolio for two years for a buck an issue. I plan on getting a copy of the initial issue to check it out.

Reuters has a story that Sirius and XM have made a federal filing stating that the merged entity will allow more a la carte options, meaning that customers could subscribe to a lower price point than the current $12.95/mo each company charges.

After Mr. Karmazin’s switcharoo earlier, this actually worries me. The great part about it currently is that my $12.95/mo gets me almost everything that XM has. My concern is that they’ll put baseball up in a premium price point and I won’t be able to get it for the current price that I am paying. The wording of the statement according to Reuters seems like exactly the same winkwink, nudgenudge Karmazin pulled on us initially.

After the merger, customers may elect to receive fewer channels at a monthly price lower than $12.95; substantially similar programming at the existing $12.95 price; or more channels … at a modest premium to the cost of one service, and considerably less than the cost of subscribing to both services

Reading that quickly, one would think that I’ll get the same programming I am currently getting for my $12.95. However, notice that the statement says “substantially similar” programming. What is substantially similar? I’d argue that removing baseball from my package would not be giving me substantially similar service despite the fact that it is a small percentage of the overall channels. That would obviously be what XM/Sirius would argue, that I am only losing a few channels whether or not that is the whole reason I subscribe.

I’m still iffy on the merger at best. I don’t feel like Mel Karmazin has been forthright with anybody, especially the customers. I have a serious problem with that.

See my previous merger coverage here, here, here, and here.

It wasn’t three days ago that I voiced jubilation at the fact that Mel Karmazin had said that price freezes would be in order for the XM-Sirius merger and that I was all for the merger with my last hesitation being overcome.

Well, not so fast. Kevin Martin, the current chairman of the FCC and the likely deciding vote on the merger, was interviewed by the NY Times in today’s article and shed some light on what Mr. Karmazin really meant.

As he sought to sell the proposed merger of Sirius Satellite Radio and XM Satellite Radio to Congress, and by extension to regulators like Mr. Martin, Mel Karmazin, the chief executive of Sirius, vowed last Wednesday that prices would not be raised and that listeners would benefit enormously by getting the best programming from both companies.

But in separate conversations with two people after Mr. Karmazin’s testimony to a House committee, Mr. Martin said that subscribers may be surprised to learn they may actually have to pay more than the current monthly rate of $12.95 if, for example, they want to receive all the games of Major League Baseball (now available only on XM) as well as all the professional football games (now only on Sirius).

Mr. Karmazin, reached on Tuesday, said his testimony was not misleading and that he meant to say two things: subscribers wanting to keep their existing service would not face a price increase, and listeners who wanted the best of both services would pay less than the combined rate of $25.90.

Whoa, wait a goshdarn minute. You were telling us that we would not pay more than we are currently paying, which is $12.95/month. Now, it’s we won’t pay more than the combined $25.90?

Mr. Karmazin is scheduled to appear before a second Congressional panel on Wednesday.

In the interview on Tuesday afternoon, he said he thought he had been clear that to get the best of both XM and Sirius, consumers would have to pay more than the monthly rate of $12.95, but less than the combined rate of $25.90. Consumers who just want to stay with their existing lineup would be guaranteed the same price, he said.

I won’t pay $25.90/mo (actually more because we have multiple radios) when I can plug my iPod in instead (there I helped your argument). Don’t tell us prices will be frozen and imply that we’ll get both services when that’s not the case. Tell us what the rates will be now instead of playing around and coming out with a $25.89/mo price point after the merger is approved.

I’ve now seriously cooled on the merger. Frankly, I’m not sure that I’ll trust them the rest of the way to tell us the truth if this main tenet of the merger can be so easily spun. I love my XM, but I have zero tolerance for companies that lie to me and I could easily live without my XM radio. I’m watching closely and will continue to watch and see. But right now, I’m not happy.

Looks like I was wrong on one item and correct on another in my initial analysis of the XM-Sirius deal from a customer’s perspective. XM and Sirius have reiterated that old radios will work with the new service per a letter that XM has sent to subscribers (I haven’t received it yet).

While on Capitol Hill this week defending the merger to Congress, Sirius CEO Mel Karmazin agreed that the companies would allow government set price controls to get the merger approved. Mr. Karmazin’s arguments were spoofed on public radio’s Marketplace program this week (I was so happy when this became a free podcast) as they don’t appear to be buying the “less is more” campaign.

Oh, how I loathe John Ashcroft. This week he blasted the deal in a scathing letter to his successor at the Justice Department on behalf of the National Association of Broadcasters, a terrestial radio lobbying group. While he didn’t bring up any new issues, the letter was seen as a blow to the merger by a very well connected man in Washington.

Well, not so fast there. The Wall Street Journal ($) is reporting that Mr. Ashcroft actually approached XM to lobby on their behalf. When they turned him down, he went across the street to the NAB and they hired him instead. That led to the scathing letter that promised everything short of frogs raining from the sky if the merger went through. I guess Hell hath no fury like a woman scorned for Sega lobbyist scorned.

Engadget has the goods on the presentation that XM and Sirius put together for shareholders on their proposed merger. They complained that the presentation was short on the goods for customers and long for the goods for shareholders. Well, it’s a presentation to shareholders first of all. Second, there are mentions of the items that they trotted out to the media: more bandwidth for more channels, increased services such as real time traffic, etc…

As I’ve said before, as a customer I’m excited about the merger. I like the possibility of having both services at my disposal. I’m a little worried about the effect on pricing, but I have faith that the FTC and the FCC will wring pricing concessions as part of the deal to get the merger approved. We’ll have to see what happens, but I plan on covering it through to the end.

See also the letter XM sent to customers.

Here is a copy of XM’s letter to subscribers regarding their merger with Sirius.

February 20, 2007
Dear XM Radio Subscriber:

We want to share with you some exciting news:  Yesterday, in Washington DC, we announced XM Radio will be merging with Sirius Satellite Radio to form the premier digital audio service.

The merger will create a satellite radio company that will provide consumers across the country with more and better premium radio programming. The combined company will be able to compete better in what has become a very complex and dynamic entertainment market.

Where today our exclusive contracts mean you had to choose between baseball and football or Oprah and Martha Stewart, the new company will seek to ensure that in the future, you will be able to access both companies’ programming.  And, once we are fully integrated, those of you who have factory-installed satellite radio will no longer be limited to the programming provided by the exclusive satellite radio service chosen by their car manufacturer.

This merger should be completed in late 2007 or early in 2008.  Throughout the year, we will provide updates on how the merger is progressing and information will be available at our website, www.xmradio.com.

Between today and the merger date, as well as during the period immediately after the merger date, all of your services will remain the same.  The channel lineup, the customer service number, the great music technology, and the XM Radio web site will all remain unchanged and there will be no disruption to service.  But, if you have questions, information will be available and maintained on our website, and you can contact our Listener Care team at 800-XMRADIO, with questions and concerns.

XM Radio continues to be committed to providing you the highest quality audio entertainment and customer service available today.  After the merger, our new company will be able to offer you the most exciting listening experience in radio.

Sincerely,

Hugh Panero
CEO, XM Satellite Radio

Not much new other than the fact that factory equipment should be able to handle the new signal. I’m guessing those of us with aftermarket equipment won’t get so lucky.

Well, color me shocked. As I’ve blogged before, I am a happy customer of XM. I really never thought that they would try to merge with Sirius despite all the talk that they would. Well, looks like I am wrong.

I really can’t imagine that the FCC would allow the only two satellite radio companies to merge without significant concessions. As a matter of fact, there is currently a specific rule stating that they cannot merge. When DirecTV and Dish Network discussed merging, the FCC put the smack down on the two companies instantly. FCC Chairman Kevin Martin is clearly not amused as the AP has him quoted as saying “[t]he companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices” and that the hurdle would be high to any merger.

I’m excited about the prospect of having both the NFL and MLB on the same radio. I’m not a huge fan of football, but it’s a nice way to pass a Sunday drive back home from one of our families when baseball is out of season. I couldn’t care less about getting Stern and I’d imagine some of the music channels would get whacked (please not Lucy or Fungus) but overall I think it’s good for the customers of the services.

Unless prices get pushed up because of the lack of competition. I wouldn’t be at all surprised to find a rate freeze being negotiated to get the deal done.

For investors, I think it’s a great deal and one that may save both companies. Neither one appeared to be on the path to profits competing against one another but together they may be able to wring out enough costs to become profitable. Certainly, they should be able to lower the number of satellites that they need to reach their combined subscriber base.

I think it’s a win for just about everybody as long as the FCC carefully considers the deal and does get some concessions from the company that they won’t jack up rates just because they are the only game in town. I have little doubt that XM and Sirius will be glad to agree to concessions to get the deal done as both probably see this as the only profitable endgame.

I often slag my local paper (the St. Louis Post-Dispatch) as second rate. Growing up in a city with two first rate papers will do that to you. When they have real stories, the P-D does a great job with them and they have good reporters, but the cost cuts of the past several years have eliminated a lot of those top notch reporters and left the paper largely rerunning AP wire stories.

One of the stories that they have been following really well is that of our local electric utility, AmerenUE. Ameren is a conglomerate of all of the smaller electricity companies that were in the area and they have most of Eastern Missouri and Southern Illinois locked up.

They have had, let’s say, problems in the past 18 months. A storm in August 2005 left nearly half a million people without power for up to four days.

Last December, a reservoir at the top of a hill gave way unleashing a torrent of one billion gallons of water on a national forest and literally washing away the forest ranger’s house. Luckily, nobody in his family that was in the house at the time was seriously injured. Ameren is currently paying hundreds of millions of dollars to repair damage as the reservoir gave way because of human error and lax inspections.

Then, this summer two storms packing 75 mph winds hit the area two days apart. Another half a million people lost power as the temperatures soared to over 100 degrees. Some people lost power for almost two weeks. After the summer storm, the P-D began reporting that Ameren had been chastised by the Missouri Public Service Commission (it’s “regulator”) for cutting their tree trimming budget and falling several years behind on trimming trees away from power lines. Despite blaming trees toppled by the winds for the outages, Ameren claimed it was keeping up on tree trimming and had spent enough on upgrades to keep the system going.

Just before the summer storm, Ameren filed for a rate increase. In the filing, Ameren claimed that they were falling behind on system upgrades and that a rate increase was needed to fund further improvements. Yup, exactly the opposite logic that had so publicly trumpeted after the storms.

Last month, a major ice storm hit the state of Missouri. One of the worst in recent history according to most people. Again, half a million people lost power, some for two or more weeks as crews could not reach the downed lines in wooded areas. Though once again defending their spending on the electrical system, Ameren changed course and said these outages proved that they needed increased rates for upgrades and everybody should just shut up and pay, even if they have lost power for weeks at a time several times over the past couple of years.

Another P-D article that appeared two or three Sundays ago (but is not online) showed what a lackadaisical job Ameren did with line inspections. Most of the inspections that are done are done by the tree trimmers themselves, who have no electrical training other than “cut tree away from line”. Even the tree trimmers union has filed complaints against Ameren for this practice. But Ameren continues to say that lines are routinely inspected (though it fails to say by whom) and that the system is doing just fine.

Everyone expected the PSC to turn over and let Ameren rub it’s fuzzy belly like it has time and time again. However, PSC staffers shocked everybody but saying Ameren should not only be denied their rate increase, but actually have their rates cut. Apparently having three major outages and a hilltop reservoir give way in 18 months was enough for the PSC to notice that Ameren is doing a crappy job.

It probably helps that the political appointees of the PSC (and their bosses) are a little nervous now that Ameren’s approval rating rivals that of President Bush and that not doing something will make them look like the powerless bureaucrats who are sleeping with the utilities they regulate that they are.

The decision is not final and has to go to the PSC board, which is all politically appointed unlike the staff positions that are civil service jobs. It will be interesting to see if the PSC makes a big public display and then quietly approves the rate increases.

I am a happy subscriber of XM Radio. It’s saved me on many a trip to my in-laws when I couldn’t find a decent radio station. The fact I can listen to the (no longer World Champions) White Sox even though I no longer live in Chicago makes me happier than you can imagine.

But I think satellite radio as the death of terrestrial radio (you know, the old fashioned free kind) is overrated. Satellite radio may not even make it as XM and it’s only competitor Sirius still hemorrhage cash without end in sight. I still listen to normal radio in the car when I don’t feel like switching out the XM receiver and my iPod (and I forget my iPod).

That brings me to what I think will be about the death of radio for me. My iPod and podcasts. Now that This American Life and Marketplace have both gone to free podcasts, I’m only waiting for Car Talk to go free before I stop listening to NPR via radio entirely (yes, I will still support my local station).

I’ve found free podcasts that cover just about anything. I might pay for the daily WSJ podcast or a couple of others, but most of the podcasts I have are free. Several BusinessWeek podcasts, Engadget, and the Tax Foundation make up some of them. Others are more specific to music genres.

But the more I delve into podcasts, the less time I have for radio. If I can get all of the radio I want the way I want it, why listen to commercial radio and deal with ads? If I can get it free, why should I subscribe to XM, for that matter? Radio will have to adapt to survive, something it hasn’t done in the face of satellite radio.

HD radio is one way they could do it. It allows for multiple channels per frequency and could allow a station to broadcast multiple streams of music to further segment their audience. Ads could be better targeted (though ads for my age group don’t necessarily interest me) which would command a premium even though the audience may be smaller.

But that would require the industry to change, which it largely hasn’t done in the past 50 years (we still have payola, for cryin’ out loud!). We have the largest radio provider going private, which will likely kill any investment they are making in HD radio (Private Equity firms aren’t known for spending money on anything but themselves). We have risk-averse programmers playing only songs from major labels (see payola) where they have a guaranteed return. We have stations mostly owned by large corporate entities that are interested only in profits and not art.

And that’s why I am turning more to podcasts and away from traditional radio. And I know I’m not the only one.

There are few days that make me smile more than Charlie Brown Christmas night. I am a huge Peanuts fan (my wife has “Linus and Lucy” as her ringtone for me) and I have them on VHS and now DVD, but catching it on television is a pure joy for me.

NPR did a wonderful story this morning on how the show was nearly killed by CBS execs that thought mixing jazz with animation and the adult themes would not resonate with kids.

CBS “didn’t think jazz fit properly,” Mendelson recalls. The network also wanted professional child actors to do the voices of the characters, not the untrained youngsters Mendelson recruited.

He says the network also objected to the adult themes; they didn’t think the topics of materialism and faith were appropriate for children.

The show went on the air to a 50 share (according to the audio) and has become a staple of holiday viewing for millions of kids. We’re one of the families that Felix Contreras talks about at the end of the piece regarding the third generation. I plan to sit down on Christmas Eve with my folks, my wife, and our two year old daughter to watch the show.

Every network exec should hear this story of what happens when you stop underestimating the audience.