XM/Sirius continues to draw opposition


A pair of prominent Republicans have fired off letters to the FCC asking that plans to merge satellite audio services XM and Sirius be turned down. One letter came from the attorney general of Wisconsin, the other from a US senator from Kansas.

The Wisconsin AG, J.B. Van Hollen, said that satellite radio and broadcast radio are not substitutes for one another. "The FCC’s standard for reviewing a license transfer is broader than the United States Department of Justice’s merger review, and I think that this transfer should raise several red flags for the FCC," said Van Hollen. "The Sirius-XM deal is anti-competitive and anti-consumer."

Sam Brownback (R-KS) is the senator who informed Martin of his opposition to the merger. He noted the mandate that the two services offer interoperable radios to assure meaningful competition, ignored by the companies; and the mandate that the two companies never be allowed to merge, ignored by the DOJ.

"The FCC must not endorse the Department’s flawed finding that XM and Sirius do not compete with other because it’s too expensive for exiting subscribers to switch providers. Essentially, the Department rewarded XM and Sirius for their audacious refusal to comply with an FCC requirement to manufacture consumer-friendly interoperable radios."

Brownback went further, saying that satellite radio’s employment of talent like Howard Stern, who Brownback blames in part for "coarsening of the airwaves," should not be looking to the government for help of any kind. Citing testimony before the Senate from Sirius honcho Mel Karmazin, he said, "It is apparent that explicit programming will continue to play a prominent role in the business model of any merged satellite radio entity. The impact that this kind of programming has on America’s families is devastating."

RBR/TVBR observation: We occasionally have readers who take issue with our attacks on this merger. We’re not sure why. It’s not so much that broadcasters should fear competition from the merged entity any more than they do the two separate entities. It’s that it is just wrong. There are only two satellite audio services. They’ve already used the lack of truly robust multi-party competition to essentially avoid competing with one another, in many ways in violation of their charters. So we want to reward them with a government-sanctioned monopoly?

On top of this, a third company would like to get into the business, but lacks the necessary spectrum, so it’s not like there are no other companies who would like to operate in the space.

Both companies say they are in no danger of going under. In other words, neither is saying that the merger is a necessary drastic step to prevent the death of one or the other. We’ve seen analysts say the merger IS necessary to guarantee the survival of the satellite radio species. If that’s true, why aren’t either of them ‘fessing up?

So the DOJ thinks it’s appropriate to reward a pair of corporate cheats with a monopoly just because they want one? Given the track record of monopolies and of XM and Sirius, we expect they’d agree to conditions, bide their time, and then whip out the monopoly practices just as soon as the conditions expire.

In a nutshell: Competition, good. Monopoly, bad. The End.