Attorney David Balto said "A monopoly is forever." There may be temporary safeguards put in place on the proposed merger of XM and Sirius, but he said your grandchildren will be paying monopoly subscription fees. And if you live in a small town right now, with limited a limited number of terrestrial radio stations, XM and Sirius are the options, and they should remain competitive. The Chairman of the Antitrust, Competition Policy and Consumer Rights Subcommittee Herb Kohl (D-WI) said that merging XM and Sirius into one company would be a great business opportunity, over time, but he wasn't sure the government should be condoning it. Kohl compared the merger to having hundreds of over-the-air television and only one cable company. Over a period of time, the single entity could become such a behemoth that the government may have to step back in and deal with it. NRG Media's Mary Quass noted concerns that a giant merged DARS company could lock up programming, making it unavailable to broadcasters, and Balto agreed that the issue of program exclusivity by itself was more than enough reason for NAB to be concerned. And if you want to try to sell a show for national radio, you have two services to leverage; if it becomes a monopoly, one person makes the decision and that's it. Sam Brownback (R-KS) was disappointed that Karmazin was unwilling to promise to eliminate "pornography" from a combined entity (there was difficulty with how pornography should be defined). It all kept Sirius Satellite Radio CEO Mel Karmazin hopping. He repeated much of what he's said before in his two previous Capitol Hill appearances - the market is bigger than just two satellite radio companies, they'll still be in hot competition with broadcasters, iPods, telephone and internet companies, that the merged entity will have added benefit for subscribers. The session was sparsely attended by members of the Senate. Orrin Hatch (R-UT), the committee's ranking member, seemed, if not the most sympathetic, then at least the least hostile, noting that the issue hangs on the definition of the relevant market. Public Knowledge's Gigi Sohn repeated her earlier support for the merger with conditions.
Statement summaries
Mel Karmazin, Sirius Satellite Radio: Two hurdles. That the merger is not anticompetitive, and it's in the public interest. Satellite radio competes with terrestrial radio, HD radio, Internet radio, cell phones, MP3 players. We provide music, news, entertainment, sports, all things the competition also provides. Arbitron says DARS has 3.4%. 237M cars have AM-FM. NAB is most vocal opponent of merger. Two months ago, the NAB said the current media marketplace is robustly competitive and bursting at the seams with consumer choice. NAB always lists satellite radio as a competitor. There's no way of looking at the market and saying there is a single, two-company market formed by Sirius and XM. On the public interest standard, two things - lower prices, more choice. Will offer best of both companies for less than the 25.90 it would take to get both today, and would also offer a lower-priced limited subscribership.
Mary Quass, NRG Media, on behalf of NAB (she's on the radio board). XM and Sirius want to take two competitive companies and turn it into a monopoly. Neither listeners nor advertisers will benefit, and prohibition of a monopoly was an initial license condition. Both companies say they can survive without the merger. Broadcasters do not compete in national market, but satellite services come into everyone's local market and compete. National scope separates it from broadcasters. Broadcasters recognize that local is their market, and are a key service in times of emergency and as a source for local information.
Gigi Sohn, Public Knowledge: make tiers available, make 5% of capacity available for noncommercial programming over which it has no editorial control, and agree to a three-year prohibition on raising prices. Combined subscriber base will allow them to better serve customers, provide more consumer options, and lead to more innovative programming. Satellite should be allowed to provide local content - there is no reason any service should have a government monopoly over local service.
David Balto, attorney: (1) Satellite radio is a legitimate market for antitrust concern, and there is danger to competition. They are different than other services. They can aggregate audiences; they are free of content regulation, and what they do is not available to other services. (2) There should be concerns about competitive effect. Once you create a monopoly, there is no way to go back and question any decisions they may make afterwards. (3) The promise of a benevolent monopolist? A monopoly is forever, and it's never good for consumers. Brought up how "It's a Wonderful Life" dramatized the need to prevent Potter from gaining a loan monopoly.
