Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

January 19, 2007

FCC Chairman: We Won’t Approve An XM-Sirius Merger

by Doug Mataconis

For the moment, any discussion of a merger between satellite radio providers XM and Sirius is just that, talk. Nonetheless, the advantages of such a merger to both companies are apparent.

The Chairman of the FCC, who you will remember is a Republican appointed by a Republican President and approved by a Republican Congress, though, has already announced that the FCC will not approve a merger of the two companies if it is ever proposed:

NEW YORK (AdAge.com) — XM and Sirius satellite radio’s proposed merger hit a roadblock yesterday when Federal Communications Commission Chairman Kevin Martin suggested at a press conference in Washington that their licenses would cause a monopoly.

“There’s a prohibition on one entity owning both of those licenses,” Mr. Martin told reporters.

The problem, as the Adage article goes on to explain, is that the FCC has historically viewed satellite radio (and television) as its own market, and refused to look at the broadcast industry as a whole, even though it’s clear that traditional radio broadcasters consider satellite radio to be a serious competitor for listeners:

“Clearly, traditional broadcasters view satellite radio as a competitor, but FCC is viewing it as a separate entity. So [FCC's] concern would be you have one satellite radio company that can dictate prices or whatever they want. But the question is, if they jack the prices up, can the consumer in that case say. ‘I’m going to local digital radio stations or internet radio or various other sustainable products.'”

Clearly, the answer is yes. That new car you bought may come with the capability to receive either XM or Sirius, but you don’t have to buy the subscription plan, and you don’t have to renew it when it expires. More importantly, and I think this will become more a important consideration as XM and Sirius are forced into the position of running commercials on some channels (already a fact on most non-music stations on XM), you don’t have to listen at all.

Of course, the FCC shouldn’t be involved in this process at all. But, if it is going to evaluate the potential market impact of an XM-Sirius merger, it needs to have a more logical definition of the relevant market.

H/T: Outside The Beltway

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