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February 20, 2007

Some Pending Sausage-Making [8:34 am]

Watching the FCC and others decide what constitutes competition, markets and monopolies should be quite a show: Satellite radio competitors agree to merge - pdf

“If the market is defined just as satellite radio, they would never approve the only two companies merging into one — that would be like Pepsi merging with Coke,” said Howard Liberman, a Washington lawyer and former Federal Communications Commission staff attorney.

But Sirius and XM, he said, will attempt to define the industry as “music that goes into your ear,” including portable music players and AM and FM radio.

[...] FCC Chairman Kevin J. Martin said Monday that he expected the deal to face a “high” hurdle with his agency. In setting rules for satellite radio service in 1997, the FCC granted only two licenses and stipulated that one of the holders would “not be permitted to acquire control of the other” — to “help assure sufficient continuing competition.”

“The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices,” Martin said.

[...] Analysts said they suspected Sirius and XM were trying to get the FCC to consider the deal before the 2008 presidential election, when control might swing back to the Democrats. The FCC is considering allowing more media consolidation, which Democrats on the panel and in the new congressional majority oppose.

Rep. Edward J. Markey (D-Mass.), chairman of the House subcommittee on Telecommunications and the Internet, said Monday that the radio merger “merits the utmost scrutiny” by policymakers and regulators in light of “dramatic consolidation” of traditional radio.

Traditional radio firms immediately opposed the merger.

See also Merger Would End Satellite Radio’s Rivalry and Satellite Radio Firms Plan To Merge (pdf)

Later: Handicapping the fight: Shift on Antitrust Issues May Aid Sirius-XM Deal and A matter of competition (pdf)

An opinion from the WaPo - They Fuse, You Lose; pdf

Now, XM and Sirius suggest that wireless broadband will keep them honest; customers turned off by both FM and satellite radio will be able to listen to music sent through their cellphones.

But most wireless carriers impose grotesque limits on what you can listen to or watch on a phone: Listening to a Web radio station on a phone’s Internet connection violates most of their contracts. This isn’t bringing the diversity of Internet radio to cellphones — it’s recreating the controlled universe of cable TV. And it’s unlikely to offer much of a meaningful alternative to dissatisfied listeners.

It’s too soon to know what the government will do with the XM-Sirius merger proposal. But by not addressing these underlying problems, Washington isn’t just approving telecom monopolies, it’s aiding and abetting them.

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