Michael Giberson
XM and Sirius, two satellite radio networks, announced plans to merge yesterday. Amusingly, in the New York Times the story begins with “The nation’s two satellite radio services, Sirius and XM, announced …”, while in the Washington Post leads with ”XM and Sirius, the two satellite radio companies ….” In each case the hometown company goes first.
Both stories highlight the apparently high antitrust standard the two companies must overcome to gain approval for the merger. The Post:
The FCC bars a single company from controlling the satellite radio market, but FCC Chairman Kevin J. Martin recently noted that such rules can be changed. Martin said yesterday that the hurdle “would be high. . . . The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices.”
As the Times explains:
An army of merger and antitrust lawyers for both sides worked several marathon weeks of conference calls and trips to Washington to gauge the political climate for the transaction before opining that the deal should pass regulatory muster. Simpson Thacher & Bartlett and Wiley Rein are representing Sirius; XM is being advised by Skadden, Arps, Slate, Meagher & Flom; Jones Day; and Latham & Watkins.
Doesn’t it seem a little silly that federal regulators are suggesting somehow the world would be worse off with one satellite radio company (for the time being) where as of a few years ago there were none? Do consumers have a right to two money-losing national music, talk and news services? Doesn’t the FCC know that by raising barriers to exit, they create barriers to entry for some future satellite radio rival?
I’m not a subscriber to either service — in fact I just barely had a CD player put in to my car a few months back when I started commuting to an office. The CD player also plays mp3 files and has an audio imput so I can plug in an iPod. I don’t really need more options for in car entertainment, but I’ve been tempted to go satellite after conversations with a few passionate fans.
You know, just maybe if they called up Texas Fred, the Zydeco Cowboy and put him on coast-to-coast, I might have to do it.