After more than a year of stalling, the Justice Department’s antitrust division has finally granted its long-awaited blessing to the marriage of XM and Sirius Satellite Radio. The forthcoming XM-Sirius monopoly, which almost no one but consumer advocacy groups is calling a monopoly, needs only the the Federal Communications Commission’s approval at this point.
Aside from the obvious concerns of the monopolistic, anti-competitive overtones in a deal between the only two satellite radio providers on Earth, there is a larger source of conflict delaying the merger: its effect on terrestrial, or traditional, AM/FM radio.
The National Association of Broadcasters is one of the most prolific and undeniably powerful lobbies on Capitol Hill and has a vested interest in keeping satellite radio at bay. With satellite providers’ multitude of high-quality programs streaming commercial-free to those subscribers willing to pay, XM and Sirius are unquestionably able to provide something terrestrial radio long ago left by the wayside — variety.
Although I would normally avoid siding with any Washington lobby (let alone the NAB, which has a stranglehold on conventional media), this merger is a terrible idea. Supporters of the deal who are looking to dispel claims of an antitrust violation have often and rightfully pointed to the fact that, thanks to the NAB, terrestrial radio is largely controlled by five major conglomerates. The portion of their argument that goes unnoticed or unspoken is that satellite radio could much more easily succumb to the same fate, if this $5 billion deal is any indication.
What was once a niche luxury item is now a staple of at least 17 million American homes, and the numbers are growing every day. Herein lies the problem. Many supporters of the merger contend that a commodity item is intrinsically exempt from traditional laws and attitudes barring monopolization. However, one could — and should — make the argument that satellite radio represents what cable and satellite television did many years ago.
There was a time when having more than 12 television channels was considered superfluous. However, our need for new media grew and evolved into something more sophisticated and, yes, gluttonous.
From broadcast television came cable, digital, TiVo and so on. This fragmentation of the market made it possible for consumers to pick and choose which services they wanted without worrying that any one medium would usurp the rest. Satellite radio fragmented, as well, with XM and Sirius dividing everything, all the way down to equipment-compatible automakers.
Now satellite will grow as one corporate behemoth, consuming 100 percent of the bandwidth and promising customers low prices that will skyrocket in a couple years’ time. Satellite will evolve with more dynamic programming, and we’ll be forced to pay whatever XM-Sirius decides is fair.
All this will be a result of this merger-happy climate where vertical integration is king and anyone who longs for corporate competition is considered anti-business.
