The merger must be approved by the Federal Communications Commission and Department of Justice.
The FCC’s rules on satellite radio licenses currently bar such a deal, and Chairman Kevin J. Martin said yesterday the regulatory hurdle would be “high.”
“Obviously, the commission will evaluate any transaction filed to make a determination whether or not approval would be in the public interest. The hurdle here, however, would be high as the commission originally prohibited one company from holding the only two satellite radio licenses. The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices,” said Mr. Martin, a Republican.
It would be a grave mistake to take the narrow view that the only competition that XM and Sirius face comes from one another. Consumers have a multitude of options — traditional free FM and AM stations, iPods/MP3 players, Internet radio, etc. XM and Sirius are looking to merge in order to survive in this competitive environment. Would the government rather have only one satellite radio company because one went bankrupt or only have one because the two existing ones merged to form an even better combined service? Would they rather have NO satellite radio because XM and Sirius drove each other into the ground trying to compete?
So, who opposes the merger? Not the subscribers to XM and Sirius from what I have been able to discern.
In a statement yesterday, Dennis Wharton, executive vice president of the National Association of Broadcasters, described the deal as “a government bailout to avoid competing in the marketplace.” The NAB is a trade group whose members include traditional radio stations.
Exactly where is XM-Sirius looking for money from the government? Since when did seeking permission to merge constitute asking for a government handout? And what would stop the FCC from giving a satellite radio license to another entity that wanted to enter the arena and compete? It sounds as if anyone is looking to avoid competing in the marketplace, it is the traditional over-the-air radio stations. Nearly 14 million people are paying $12.95 per month to subscribe to satellite radio. That is nearly 14 million people that traditional over-the-air radio stations can’t give away their product to. That says something about the quality of the two products being offered here.
As an XM subscriber myself, I enjoy the music programming as well as the fact they carry every Major League Baseball game for every team from spring training through the World Series. I look forward to an XM-Sirius service that also has the NFL and the original MTV VJs as the hosts on their ’80s music channel. Count this consumer in the “YES” column for this merger. And if one day the costs go up too much or the product declines, I know that I have other options available to me. Chairman Martin, let the marketplace decide — approve the XM-Sirius merger.