Today, I had an entry Dugg for the first time (that I know of). Very cool. I had no idea how many people would stumble on a post from a link at Digg. Maybe I should investigate this not-so-new-fangled concept.
Adding to the fun, it inspired a user to leave a mildly bizarre comment on the original entry. I responded by posting it when I normally wouldn’t. It did prompt me to ponder, if Digg “suxxx”, why would someone use it to find links on The Internets?
Now that I’ve had a day or so to digest the proposed Sirius–XM merger, I have a few more coherent thoughts about it. As a Sirius investor, I think this is ultimately the right deal. I know that CEO Mel Karmazin is offering the usual talk of synergies and cost savings. This is standard fare for such transactions. I have no doubt a combined company will realize some of that, but I’m not silly enough to assume it’ll be grandiose or immediate. Any significant benefit from this is years away, at least. I’m okay with that because I’ve invested for the long term. Most of the time I only know the general Sirius share price. When my shareholder ballot arrives, I’ll check “yes” with realistic expectations.
As a customer, I’m thrilled by this deal. As I mentioned, the ability to receive Howard Stern and Major League Baseball on one subscription is irresistible. I find Sirius’ radio programming better (particularly the original MTV VJs on The Big ’80s), and I’m a devoted Howard Stern fan. Those two items are year-round. That’s why I subscribe to Sirius. But the absence of Major League Baseball broadcasts is a huge frustration. This merger would solve that, even if the combined company offers a “cafeteria-style” selection of programming, as I’ve read. I can live with that. I don’t really care to have Oprah, Bob Dylan, Opie and Anthony, Nascar, or Martha Stewart. Give me Howard Stern and the Phillies for a reasonable price, and I’ll be a subscriber. To get me, it’s that simple.
However, the information announced so far is insufficient. The FCC and Department of Justice will have questions. First, Sirius and XM must convince the government that their market is not satellite radio, but audio entertainment. (I’d cite a reference for the term audio entertainment, but I don’t remember where I read it. I’ll give credit if I stumble upon it again.)
My audio choices at work are a perfect example. During a typical day, I’ll listen to Stern in the morning through my Sirius subscription. When that’s done, I’ll move on to my iPod and whatever music appeals to me at the time. Or maybe an audiobook. Then I might switch over to an internet radio station. On my commute home, I usually listen to terrestrial radio. When I get home, I have cable television, Netflix, and Xbox 360.
Every one of these things competes for my time and money. I can afford various subscriptions for those that require one, but if the programming on any one of them becomes stale or the price exceeds what I think it’s worth, I’ll cancel it. That’s the fate that HBO faces from my household as soon as The Sopranos is done. It’s barely $10 per month, but it isn’t worth it to me. I’m capable of making the decision better than the federal government, regardless of the implied public trust built into the artificial market created by government satellite licensing.
The short-term implications of this deal are also apparent, both as an investor and a subscriber. Sirius and XM work on separate signals, so each company’s hardware is incompatible with the other. I’ve been thinking about upgrading my Sirius receiver since the unit I have is several years out-of-date. But I don’t want to spend $300+ on a new receiver with all the features I want if I’ll have to dump it in a year when (if) the merger wraps up. I’ve seen no concrete answers on this, only that the companies are working this out. That’s wonderful, but current subscribers are left out in the interim if they want to upgrade.
As for potential subscribers, what incentive will they have to sign up now? The rational decision is obviously to wait this out until the executives offer answers. That will hurt both companies financially until they decide. That makes me nervous realistic about any short-term bump in the share price from this deal. The downward pressure on revenue and subscriber growth, which is what this industry needs least right now, is evident. The only responsible choice is for customers and potential customers to get answers soon. Essentially, I want the Heroes approach to answering questions, not the Lost approach.
I understand the hurdles this merger will face. In the end I think the government should get out of the way let it proceed. It will benefit customers when viewed with the correct understanding of the combined company’s market competition. I applaud the deal with guarded enthusiasm.
Full disclosure: Several times in the past, I subscribed to XM. For a brief time, I owned XM shares. For what it’s worth.
¹ The title of this entry is a quote from Heroes. Sylar said it to Mr. Bennett. I think we might be able to ask the same thing of the federal government as it reviews this deal.
Here’s an essay from Robert Samuelson on the risks of global finance, and there isn’t one proposed government intervention. I’m impressed. That’s refreshing.
“Liquidity” is a common, but confusing, economic metaphor. Financial markets (say, stock and bond markets) are said to be “liquid” when it’s easy to buy and sell. Transactions flow smoothly. By contrast, either buyers or sellers are scarce in an “illiquid” market. Prices move sharply, up or down. Markets can also have too much liquidity: Investors may take increasingly large risks to put their abundant funds to use. “Bubbles” can form. Losses may follow.
We now have evidence of that.
Mr. Samuelson offers recent subprime mortgage losses as an example. It’s true enough, but I would take his idea a step further and explain the reasonable alternative when corporations get into “excess” liquidity. When in doubt, return it to shareholders. What makes executives believe they’re significantly better at finding uses for those funds? The new dividend doesn’t need to be permanent, just an acceptance from management that they can’t always find investments with a risk-return ratio suitable for their business.
Sure, those subprime mortgages will work out well for some mortgage companies. But if the company offering them isn’t normally in the subprime market and is now offering loans simply to utilize excess cash, it ignores risk relative to what its business deems reasonable. That’s unwise and bad for shareholders. It would be better off giving the money to them. It’s their money, after all. Let them judge how they want to invest (or spend or whatever).
I’ve oversimplified, of course, because there is nuance here. While Mr. Samuelson is correct that “‘excess liquidity’ often evaporates through losses”, it doesn’t have to be that way. Take the next step. How do we utilize excess liquidity without seeing it end in losses?
Contrary to the newly popular argument that circumcision is an appropriate prevention technique against HIV, consider this trial:
Jacinta Julia Adams Fernandez, a mother of three, is one of 175 Dominican prostitutes lending their bodies to a trial of what New Jersey-based Merck & Co. hopes will prove to be a vaccine against the virus that causes AIDS.
…The prostitutes, who will spend much of the next four years traveling to Santo Domingo for injections and checkups, were recruited from brothels across the country. They are among some 3,000 people in eight countries testing the experimental vaccine — a combination of deactivated cold viruses and synthetically produced HIV genes meant to train the body to destroy infected cells.
The article states that the vaccine is in the second of three phases. Each phase is several years long. What should we tell the male circumcised today as an infant, solely to further limit whatever (small) risk of HIV infection he may eventually face, if this vaccine turns out to be effective? We’ve found a better method of prevention, so sorry you had to give up a functioning, healthy body part? Oops? Will those pitiful regrets suffice?
Infant circumcision as a means to prevent HIV is flawed from the start because it’s a clear violation of the child’s rights. But it’s also flawed because there may be a better solution (aside from not engaging in unprotected sex with HIV-positive partners) by the time he’s old enough to begin having sex. Science is not complacent. It does not stand still with “good enough” solutions. That truth should constrain unnecessary actions today. As I’ve said many times and will repeat again, if an adult male wishes to have himself circumcised as an added prevention against HIV, he should have that choice. I don’t have to agree with it or like it. What to do with his body should be his choice.
The same applies to infants. When he becomes sexually active, he should have the choice with all scientific information available at that time. There is a significant difference between an adult circumcising himself now, knowing that a successful vaccine is still, at best, years away, and parents circumcising their son today without knowing what his risk will be, based on his personal behavior and the scientific advancements in the approximately decade-and-a-half until he becomes sexually active. Ignoring the distinction is unethical.
Via Boing Boing.
Remember stories like this through all the lies we’ll hear in the next few years about the trouble with capitalism and how it’s a tool of the rich.
The free-for-all is a boon to the millions of Americans who want to trade in their bulky analog sets. Thanks to the likes of Westinghouse, which undercut the prices of premier brands by 20% to 40%, LCDs are no longer a luxury item. Nearly one-third of the 30 million TVs sold in North America in 2006 had LCDs, and by yearend they’re expected to account for half of all TV sales. The average 27-in. LCD set now retails for less than $650, compared with $1,000 in early 2006, says iSuppli, while 40-in. models have plunged to about $1,600, down from $3,000 during the same period.
…For many in the industry, though, the competition is brutal. Prices for LCD sets are falling so rapidly that retailers who place orders too far in advance risk getting stuck with expensive inventory. Circuit City Stores Inc. (CC) cited plummeting prices in its Feb. 8 announcement that it will shutter nearly 70 outlets. The Asian companies that make the LCD panels that go into the TVs are getting slammed, too. Korea’s LG.Philips LCD Co. (LPL) attributed a $186 million loss in the fourth quarter to the 40% drop in display prices last year. With panel prices expected to fall 20% in 2007, the world’s dozen or so makers of displays are scrambling to sell at almost any price just to generate the cash to survive. “The cuts have stressed everybody in the supply chain,” says Paul Semenza, the vice-president for display research at iSuppli.
No doubt this type of example will fuel people like Sebastian Mallaby into pushing for a bigger safety net, propped up through higher taxes. That would be a bad lesson. Instead, notice how those who want an LCD television can now get more for less. Some who couldn’t afford such a TV last year will now be able to purchase one. This is progress, and it can apply to any field when unrestrained by nonsensical falsehoods. The flaw is never with capitalism, only with how it’s implemented or who does the implementing.
I’ll have more to say on today’s announcement that Sirius and XM intend to merge after I hear the details from tomorrow’s webcast. For now, I want to express how thrilled I am at this possibility. As a Sirius customer, I love the idea of getting Howard Stern and Major League Baseball on the same service. As an investor, I like the possibility of reduced total expenses. But mostly, it’s about Howard Stern and the Phillies.
Yes, I know this has almost no chance of passing through the FCC. Give me one night of joyous anticipation.
Sebastian Mallaby uncorked a doozy today on the intersection of trade and tax policy. He seems to grudgingly concede that free trade is inevitable, so governments shouldn’t get in the way. Right conclusion, poor reasoning. For example:
Paradoxically, the changes that have made globalization less popular have rendered resistance to it less fruitful. Back in the 1980s, trade put pressure on big, vertically integrated industries: cars, electronics. In the new world of outsourcing and global supply chains, vertically integrated enterprises have been sliced into discreet processes; trade now puts pressure on tasks rather than on industries. Back-office administration and phone-based customer support may shift to India, and this shift may affect industries from banking to medical services. The manufacturing and assembly of components may be outsourced to Mexico or Asia, and this change may affect everything from toys to telephones.
The reasonable question is how much longer such a shift took as government interfered in the process. If your output is protected from competition, you’re also protected from pressure to cut expenses as far as they can be cut. The only problem is that the need to innovate doesn’t change, only the damage from not doing so. Compare the lobster tossed into boiling water and the lobster brought to a gradual boil. Which one fights back while he still can?
So trade now threatens workers in more industries. Even if it still causes less dislocation than technological change, we shouldn’t be surprised that anti-globalization sentiment has sharpened. But the advent of competition in tasks also renders protectionist remedies less sensible than ever.
Preposterous. Companies now better focus on their true business. This is beneficial. The reality that some will perform better does not constitute a flaw in the trade process.
At least Mr. Mallaby comes to the right conclusion. The same can’t be said of his tax analysis:
Consider the work of Peter Lindert of the University of California at Davis. In a magisterial work published three years ago, Lindert analyzed tax-financed transfers across rich economies and found no correlation with the rate of growth or with gross domestic product per person. This, Lindert continued, should not be surprising. What matters for growth is less the quantity of tax and spending programs than their quality.
We know who gets to decide what constitutes quality. That same central planner also decides the quantity, which reduces the incentive to tie the two together. It’s most frustrating that the trade policies mentioned above are the perfect example of such incentive disconnect.
Lindert is no party-line liberal. He argues that high taxes in Europe don’t damage growth because they hit consumption and labor rather than savings and capital: This is an uncomfortable point for those who want the tax system to be progressive. But Lindert also argues that high taxes are compatible with growth if the revenue is spent well. Investments in education and public infrastructure boost a country’s growth rate. Programs that break the link between employment and health insurance enhance the flexibility of workers. Subsidized child care keeps women in the workforce, encouraging employers to invest in training them.
How is a belief that high taxes don’t damage growth not party-line liberal? But that’s less the point here than the notion that high taxes are “compatible” with growth if the revenue is well spent. Again, we know who gets to determine how to spend tax receipts. It’s fine to say that investment in education and public infrastructure boost a country’s growth rate. I’m not going to argue against that. I just find it absurd that the possibility that the private sector might provide even better quality than the public sector is never considered. Any honest look at our public education system would demonstrate that we could improve, to be kind, and money is not the lacking aspect.
Basically, Mr. Mallaby says he’ll give us economic freedom if we’ll agree to give up economic freedom. No thanks.
I haven’t seen the report mentioned in this story, but I don’t need to read it to know that any recommendation it makes is unconstitutional. The First Amendment says what it says, without exceptions for violence or protecting children from potential harm. This is classic government overreach permitted by populist ramblings.
Television networks are free to sprinkle their programs with shootings, slashings, torture and other gore because the government has no regulatory authority over violent programming. But a draft report being circulated at the Federal Communications Commission says Congress can change that, without violating the First Amendment.
Networks are free to sprinkle such things into their programs because we have a previously recognized right to free speech expression. Cable has even more freedom, yet it’s hard to argue that those networks are showing more than the broadcast networks. Any viewing of a commercial for 24 should be enough to counter such silly complaints. (Also important, we’re more upset about fake torture on television than real torture by our government? That’s majoritarianism at its most hypocritical.)
The long-overdue report suggests Congress could craft a law that would let the agency regulate violent programming much like it regulates sexual content and profanity _ by barring it from being aired during hours when children may be watching, for example.
Take one wrong idea and perpetuate it. This is what we’ve come to. Every decision made by every person should be filtered through whether or not it’s appropriate for children. We really are marching along to ever-more statism while the majority stands by and cheers.
I have a better idea: parents. Shocking, I know, but it seems to work when applied. It’s easier to pass time-consuming parenting decisions to someone else, I suppose. I don’t have kids, so maybe I’m missing the point. I thought it was to experience raising a child from dependence to independence. Is it really just a task designed to pass a child from one dependence to another? Maybe it’s a scam to have free labor for household chores.
Dan Isett, director of corporate and government affairs for the Parents Television Council, said the industry’s campaign to make parents the violence police is “purely designed to convince the Congress that they (programmers) are being responsible.”
The parental blocking technologies are insufficient due to a flawed television rating system, he said. As for the argument that cable is pressuring broadcasters to be edgier, Isett believes that’s nonsense.
Umm, if the ratings system is flawed, presumably letting inappropriate violent content senak into a lighter rating when parents might expect otherwise, parents should block shows with the offending rating. If that means you block everything but G-rated content on the Disney channel, so be it. That’s simple, and technology most certainly can handle that. Instead, the Parents Television Council wants government to do the job for parents. No effort needed. This would be bad enough if it applied to PTC members, but the PTC obviously wants all children shielded from what it deems inappropriate. Start with majoritarian nonsense and swirl in a batch of authoritarian goodness.
Enjoy this most laughable claim in the article:
The issue is bipartisan. Martin, a Republican, gave a joint interview to The Associated Press with Democratic Commissioner Michael Copps.
Getting a proud censor like Commissioner Copps on board for more FCC regulations is about as compelling as stating that scientists believe our planet revolves around the sun. Duh. I’d rather hear from someone who believes the Constitution is still enough justification to restrain American government. That would involve principles rather than politics, though, so I don’t expect to hear it from anyone in office.
Someone from Major League Baseball finally spoke about the looming deal to provide DirecTV with exclusive rights to the Extra Innings package. In an Op/Ed in USA Today, Tim Brosnan, Major League Baseball’s executive vice president, business, had this to say in defense of whatever action Major League Baseball eventually announces.
We offer the following assurances to our fans: Any deal for the Major League Baseball’s Extra Innings subscription package, when concluded, will in no way affect a single fan’s ability to watch games of his home club in his home market. Major League Baseball will continue to make available on basic cable, satellite and broadcast television more games by far than any other sport (on average, more than 400 games per year are telecast in each market); a subscription package of out-of-market games will continue to be available to a broad segment of our fan base through either MLB Extra Innings or MLB.TV, its broadband counterpart.
There are two fundamental flaws in that paragraph. One reveals why MLB’s executives will make the right decision only if they’re lucky. The other is based on inaccurate marketing fluff.
Basically, MLB has no business acumen. It’s decision is based on justifying what it wants to do rather than doing what is justified. Mr. Brosnan states that the deal for Extra Innings “will in no way affect a single fan’s ability to watch games of his home club in his home market.” This is either ignorant or insulting. The issue is not about home clubs in home markets. MLB thinks the hardcore fans it courts with Extra Innings are merely locals who want more games. It is ignoring those fans who subscribe to Extra Innings to see their favorite team. I suspect that’s the majority of subscribers.
In my case, I subscribe to watch as many Phillies games as possible. I don’t care one bit about the Orioles or the Nationals, the two teams I’m supposed to focus on given my geographical location. I will not ask for forgiveness for developing a rooting passion that doesn’t involve a franchise that qualifies as a toddler or a franchise with a misguided superiority complex.
To Mr. Brosnan’s second claim, of course baseball broadcasts far more games than any other major sport. It plays at least twice as many games as every other sport. This is not a major feat. It’s certainly not something to brag about, given how easily commenter dianagram deflated the non-argument on USA Today’s Op/Ed blog:
Let’s do some math …. 162 games * 30 teams / 2 teams per game = 2430 possible games. You are therefore offering 1/6th of the total universe of games. The NFL offers 4 games per week on basic cable or major network (out of a possible 16 games). They therefore offer 1/4th of their total universe of games. What am I missing (I mean, BESIDES the 60 games a week on Extra Innings)?
Major League Baseball doesn’t understand its fan base. It’s too busy making decisions it thinks customers should want, decisions that comply with the strategy it hopes to pursue, while its best customers adamantly tell it that they want something else. To make this situation worse, MLB is dragging this out at a time when the focus should be on the field. Trading goodwill for a few dollars is bad long-term business.
USA Today’s opposing editorial can be found here.
Rolling Doughnut has always faced a cyclical problem with comment spam. It’s been getting worse this week, and Movable Type appears to suck tremendously at blocking what is obviously spam. One comment replicated to fifty entries should set off an alarm that sends them all to the Junk folder. It does not. To resolve this, I’ve added a passphrase to the comments page. Before clicking post, you’ll need to enter the answer to a question. It’s an inconvenience, I know, and I apologize for that. I like getting comments. But it’s a waste of my time and bandwidth to sift through pages of spam to find the few valuable, valid comments.
With anything like this, there might be an occasional bug. If you spot one (your comment doesn’t go through, for example), e-mail me at Tony -at- Rolling Doughnut dot com so I can fix the problem. Thanks.
