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    The FCC blocked the merger of Sirius and XM radio for a coup

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    Please help with the following problem.

    A Duopoly - An example WAS satellite radio.

    The FCC blocked the merger of Sirius and XM radio for a couple years while they both bleed red. Finally, they approved them to become a monopoly. Still, XM/Sirius doesn't have that much pricing power. I wonder why?

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    Solution Preview

    XM/Sirius will never gain the pricing power that it both wants and needs, that would send sales through the roof. In fact, the XM/Sirius CEO just announced recently that in 2012, they're forecasting to add even fewer subscribers than they did in 2011, which shows that their business is declining, plus they slightly increased prices, which sent many subscribers packing, because they didn't want to pay the increased prices, which further proves that they, in fact, do not have pricing power.

    This is for a few different reasons. I can turn on the radio in my car, and get several channels free, which are many of the same channels that XM/Sirius charges for, in their satellite radio packages. XM/Sirius does have offerings that I cannot get on a local radio channel, like ...

    Solution Summary

    The following posting discusses a situation where the FCC blocked the merger of Sirius and XM radio.