The Sirius-XM merger: a rant.
It is ridiculous that the proposed merger of Sirius and XM has been dragged through the regulatory process this long. And now witness the latest, courtesy of The Hollywood Reporter:
Attorneys General Oppose Sirius, XM Merger
A group of state attorneys general made a last-ditch effort this week to convince the FCC’s wild-card to oppose Sirius Radio’s proposed merger with XM.
The AGs told FCC commissioner Deborah Taylor Tate in a phone call July 1 that the combination would deal a “stacked deck” to consumers despite voluntary conditions the companies have agreed to that they contend would ameliorate anti-competitive concerns.
What I’ve seen to date suggests to me that (a) the satellite-radio market isn’t viable enough to support two competitors, (b) a combination of Sirius and XM would tend to give consumers more choice, not less, (c) the companies have been reasonable in accommodating the concerns of the Justice Department, the FCC, and others, and (d) while the combined company would be the only game in town in U.S. satellite radio, it would still compete for attention with, among others,
- commercial terrestrial radio,
- public terrestrial radio,
- iTunes,
- Pandora,
- other Internet-based music services, both legal and illicit,
- various forms of recorded portable media (CDs, cassettes, 8-tracks, vinyl, celluloid discs . . .),
- cable television,
- satellite television,
- cable radio,
- broadcast television, and, recalling the road trips of my youth,
- singing in the car.
Listen, I don’t want consumers to suffer, and I’m not opposed to restrictions on anti-competitive practices. But — as in the case of the FTC’s asinine attempt to block Whole Foods‘ acquisition of Wild Oats Market last year — the regulatory foot-dragging in this case is unsupportable.
When SBC buys AT&T? Yeah, scrutinize the heck out of a deal that creates a $100-billion-plus company. When Exxon buys Mobil? Likewise.
But for a deal to create a $2 billion player niche player in the squillion-dollar entertainment industry? Please.
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Previously on this topic:
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7 Comments so far
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I couldn’t agree more. I’m sick of those corrupt bastards trying to stop these two little companies from merging. But when two big oil companies want to merge no one cares. I’m keeping track of all of these elected officials who have opposed XM and Sirius and come election time I will make sure that every Sirius/XM subscriber, shareholder, and bond holder knows who they are.
I agree with yeverything you said. I am extremely frustrated with the fact that the people in charge of making these decisions are aloud to accept money from the companies that are trying to block the merger. It should be illegal to accept bribes from competitors. Also, I hate the money spent by tax payers for these people to have meetings regarding rediculous issues like this. Shouldn’t they spend their time with more important issues like athletes taking steroids, oh wait they already wasted time on that issue as well. Wouldn’t want to attack real issues like famine, the economy, or energy solutions.
I agree with you Tim. It’s crazy that the government is even concerned with this. I am an XM subscriber. But I do it by choice. If XM and Sirius merge and decide to take their “monopoly” of the market and raise prices substantially, they run the risk of losing customers from an already low customer base.
I have enjoyed XM during my hour long commute home in the afternoons. But if it wasn’t for the current “deals” keeping me at XM, I wouldn’t be a subscriber. It’s been somewhat obvious that XM is struggling to keep customers – I have been privy to this after my subscription ran out in a new vehicle I purchased in January. If the XM and Sirius merge create substantially higher prices, they run the risk of shutting themselves down.
I understand the FCC’s position on keeping some of the frequencies open for future competition and I fully appreciate the position that the merger “could” hamper the ability for future companies to gain any competitive edge when trying to enter a market that is wholly dominated by the “only” satellite radio. But XM and Sirius have both struggled in today’s market. And with the addition of HD radio, which is free, the market continues to pull additional customers from the subscriber base.
Thanks for the comments, folks. You’ve mentioned some of the peeves that I didn’t put in the original post – especially the waste of time / resources / taxpayer dollars.
Rusty, you particularly hit the nail on the head with what you said about keeping the frequencies open, which seems to me to answer questions about the merger’s possible future competition-dampening effect.
In this whole thing, the FCC has been acting as though satellite radio is a major, well-established utility like cable television or natural gas service. But simple observation reveals that it isn’t.
Tim,
Are you being paid by Sirius or XM? Your article reads like a press release from either company and doesn’t say anything other than exactly what other financial and media journalists have written.
That said, I support the merger for those reasons you cited. Satellite radio, while having high barriers to entry for new companies, are certainly not insurmountable. I say why couldn’t some idiot launch his own satellite for radio broadcast?
Phil
Hi, Phil — I’m not being paid by Sirius, XM, or any other company I cover here — except for Hoover’s, which owns this site. So you may take a disclaimer of “no financial interest” as implied for any company I discuss.
Sorry, also, if the post reads to you like a press release or doesn’t tell you anything you didn’t already know. I didn’t think I was breaking new ground here: my point was to join the chorus of common-sense voices calling for a sensible end to the review process.
As for “some idiot” launching his own satellite: I think it might be a *little* more complicated than that. ;) But I take your point – just because there’s *some* barrier to entry doesn’t mean that the barrier is insurmountable.
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