Sirius and XM Have to get Past FCC to Merge
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usrbingeek told you about the attempted merger between Sirius and XM. What he didn’t tell you is that there is a FCC provision that specifically prohibits the two satellite radio companies from merging. It would create a monopoly the likes of which we haven’t seen since the early 20th century.
For those of you that think it will lower costs it probably will, initially, but the prices will surely be tweaked once the new mega company realizes that they are a monopoly and have no competition. The Sirius/XM merger, as offered today, will surely be struck down if not by the Federal Communications Commission then certainly by the Securities and Exchange Commission.
I agree that neither company can survive on their own but what they should each be looking for is to be bought out by a corporate giant (a Google, Microsoft, or Sony for example) so that their dreams will not be a failure.
Regarding the FCC provision I found this on CNet:
What regulatory hurdles does the deal face?
The U.S. Department of Justice and the Federal Communications Commission must grant approval, posing a significant challenge. Because Sirius and XM are the only two satellite radio providers operating in the country, their merger would effectively create a monopoly. Federal legislation bars both satellite radio licenses from being owned by the same company to guard against high prices and other negative effects on consumers. FCC Chairman Kevin Martin said in a statement that the hurdle for approval would be high. “The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices,” Martin said. Given historic opposition to media consolidation by Democrats, who control Congress, the companies will have some hard lobbying to do.
Back in January FCC Chairman Kevin Martin also said that, “two satellite radio operators [must] remain in place,” according to MediaWeek. That should make it very difficult to make the merger happen.
[tags]sirius, xm, merger, satellite, radio, FCC, SEC, monopoly[/tags]
2 Comments
Daniel Gray
February 20th, 2007
at 2:19pm
I’ll wager that it won’t be struck down. Do you have a link for the FCC provision?
Philipp Haeuser
March 9th, 2007
at 2:35pm
regarding the monopoly:
depends on how you define the market, XM and Sirius are operating in. If you say satellite radio is an own market, you will have a monopoly. if you say they still have to compete with other broadcasting and radio companies you would have a highly fragmented market with several big players and there is no danger of creating a monopoly. think also about ipod, wireless internet reception.Availability of current music and entertainment programming will look ancient in five years. Internet connectivity in cars and on mobile devices develops further; the ability to reach digital content from anywhere will keep XM-Sirius on its toes. XM-Sirius is good for the digital entertainment market. Aside from adding an alternative platform for content promotion and original entertainment, a strong satellite radio company will push all other entertainment companies to offer an even more competitive product.
The merger should occur because killing it would effectively represent the end of the satellite radio business, which would be unnecessary and counterproductive. It is a proven commodity, as the combined entity already has over 14 million subscribers. This is not a threat to the broadcast and radio industry in terms of creating a monopoly, as the US has a 300 billion population and 114million households.
By definition of the FCC, satellite radio has its own market with only two competitors, XM and Sirius. Broadening the definition of satellite radio by including it in the larger digital entertainment market is the only logical solution because in fact, XM and Sirius are not only competing with each other but with many more broadcasting and radio companies.