The Good Doctor on the Evils of the Impending Satellite Radio Monopoly

Michael Giberson

Some financial analysts have concluded that maybe the XM-Sirius merger is not such a good idea, or at least not the outright winner that the companies themselves suggest. As the WSJ’s Deal Journal says: “Regulators may not present the only hurdle faced by Sirius and XM in their efforts to forge a successful combination.”

Which would be a shame, since then we would be spared the further lectures of National Association of Broadcasters president David Rehr on the evils of monopoly. Speaking to broadcasters in Las Vegas the day before the Senate Commerce Committee was holding a hearing on the merger, Rehr said:

No matter how much Mr. Karmazin and everyone else at Sirius and XM use the word, it is not a merger they seek. It is a monopoly.

A monopoly? Well sort of. They would be the only audio news and entertainment broadcasters that rely upon satellites to deliver programming to subscribers. But consumers have lots of other ways to access audio news and entertainment. (I tend to use internet “radio” in the office, and increasingly CDs or an MP3 player jacked into my car radio when driving. Don’t you find that most car radio ads are highly annoying?)

It is a government sanctioned monopoly.

So I guess that would make them the only government sanctioned audio news and entertainment broadcasters that rely upon satellites to deliver programming to subscribers. But consumers still have lots of other ways to access audio news and entertainment. And most car radio commercials are still highly annoying.

Now some of you might not be aware I am an economist by training.

This much was true, I was not aware even though Dr. Rehr picked up a PhD in economics from George Mason University, just like me.

A little googling reveals that Dr. Rehr’s dissertation was titled, “The Political Economy of the Malt Beverage Industry” (which certainly sounds more interesting than my own work, “Improving Coordination Between Regional Power Markets”). It looks like Dr. Rehr was working for National Beer Wholesalers Association at the time he did his dissertation – sounds like a clear case of spillover benefits!

I ask you, when has a monopoly ever served the interests of the consumer?

A good question, perhaps deserving of a dissertation or two all by itself. Alas, if the XM-Sirius merger collapses of its own weight we may be spared the natural experiment that might illuminate that inquiry.

A monopoly is a monopoly is a monopoly, and we at NAB will continue to adamantly oppose it.

I’m please to see a fellow GMU grad out there fighting against the evils of monopoly. I am kind of surprised, however, that a trade association like NAB would go to such efforts — spending lots of its own time and resources — in what is apparently a public-spirited campaign.

I mean, after all if the merged XM-Sirius company would be a monopoly, that must mean that they are in a separate market from the localized, land-based radio broadcasters that make up NAB membership. And if the markets are separate, than clearly what goes on out there in that potentially-monopolized market won’t hurt NAB members. So NAB and its members — presumably determined in the Dr.’s analysis to be in some-other-market-not-related-to-the-satellite-radio-market — must be opposing this prospective monopoly out of the collective goodness of their collective hearts.

(Or maybe this is just another example of their long history of anti-consumer lobbying. HT Gizmodo.)

If radio broadcasters really want to do something good for the world, maybe they should direct less attention to lobbying against the competition and more to serving their consumers. For example, how about doing something about those annoying radio commercials.


One thought on “The Good Doctor on the Evils of the Impending Satellite Radio Monopoly

  1. XM and Sirius have each already done something about those annoying radio commercials; it’s called subscription service. So far, their divided subscriber bases are not large enough and thus lucrative enough to allow them to be profitable. Their mutual bet is that a combined subscriber base would do so sooner, thus resulting in less collective bleeding.

    I suspect that the NAB’s “altruistic” position is a recognition that XM and Sirius are probably right; and, that you are not the only one who can’t stand radio commercials. It is also possible that their advertisers are unhappy with the loss of audience to their satellite brethren. The automobile is nearly the last refuge of broadcast radio and XM and Sirius are attacking it.

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