House Gets First Crack At XM-Sirius Proposal

HOUSE GETS FIRST CRACK AT XM-SIRIUS PROPOSAL
[SOURCE: Washington Post, AUTHOR: Charles Babington]
Congress and federal regulators need to get with the times. That's the message that Mel Karmazin, chief executive of Sirius Satellite Radio, plans to deliver today at the first public hearing on a proposal to merge the nation's two satellite radio companies, Sirius and XM Satellite Radio Holdings. Karmazin, who will face skeptical members of the House Judiciary Committee's newly formed antitrust task force, says satellite radio is in stiff competition not only with free, over-the-air radio but also with such newer products as MP3 players, Internet radio and music-downloading cellphones. "What I need to do is lay out the realities of the marketplace as we see it," Karmazin said. He can expect resistance. "What I'm concerned about now is whether we're creating a monopolistic situation," Rep. John Conyers Jr. (D-MI), who will chair the task force hearing, said in an interview yesterday. "I don't think it will stimulate competition, and it could very well take away from the competition taking place now in the industry." The Justice Department and Federal Communications Commission, not Congress, will decide whether to allow XM and Sirius to merge. But today's hearing seems certain to introduce the chief arguments for and against the plan, whose outcome may not be decided for nearly a year.
http://www.washingtonpost.com/wp-dyn/content/article/2007/02/27/AR200702...
(requires registration)
* Sirius Radio Chief Urges Merger
The chief executive of Sirius Satellite Radio, Mel Karmazin, is taking the campaign to sell his company’s proposed merger with XM Satellite Radio to Congress.
http://www.nytimes.com/2007/02/28/business/media/28satellite.html
(requires registration)

SIRIUS BUSINESS
[SOURCE: Wall Street Journal, AUTHOR: David Henderson]
[Commentary] In expressing its strong reservations about the proposed merger between Sirius and XM, the Federal Communications Commission seems to think that there are only two competitors and that a merger would reduce the number to one. But that's true only if the relevant market is the satellite broadcasting market. In fact, the market is much larger, including at a minimum all existing radio stations. If you doubt that, ask yourself how you would decide whether or not to subscribe to Sirius or XM. Surely a big part of your decision is the quality and range of programming you can get on "free" radio. That alone is strong enough evidence for allowing the merger. But there is even stronger evidence, and it has to do with how XM's and Sirius's "free-radio" competitors view the merger. If some competitors in an industry resent others and even end up going out of business, competition is alive and well. It's when the competitors get too cozy that we need to worry. It follows that if existing competitors oppose a merger, the merger is likely to be good for consumers. This is the bottom line: If the FCC cares about consumers and not about making things cozy for traditional broadcasters, it should allow the XM-Sirius merger.
http://online.wsj.com/article/SB117263534282621709.html?mod=todays_us_op...
(requires subscription)

SAVING RADIO IN THE SATELLITE ERA
[SOURCE: New York Times, AUTHOR: Eric Klinenberg, New York University]
[Commentary] Today in Congress, the executives from XM and Sirius who propose merging into a $13 billion satellite monopoly will argue that consolidation offers the best hope for reviving radio. Traditional broadcasters also favor consolidation. In October, the National Association of Broadcasters asked the Federal Communications Commission to relax ownership limits in local markets, so companies could control yet more stations per town. But does anyone believe that consolidation has been good for radio? During the past five years, I've traveled the country asking people to describe what has happened to their local stations, and not one has told me that radio is better than it was a decade ago. Listeners complained that their favorite local D.J.’s, talk show hosts and reporters have disappeared, replaced by syndicated shows, automated programs, predictable song cycles and endless commercials. It’s time for Congress and the FCC to consider policy ideas intended to serve the public interest, like requiring broadcast radio stations to air original programming on their new digital stations, or allowing satellite companies to run local news, talk and music. Mega-mergers are unlikely to provide any real benefits to citizens and consumers. Why resort to even more consolidation when we already know it doesn't work?
http://www.nytimes.com/2007/02/28/opinion/28klinenberg.html
(requires registration)

WHAT'S STALLING SATELLITE
[SOURCE: AdAge, AUTHOR: Andrew Hampp]
getting approval from the Federal Communications Commission is just one of the hurdles satellite radio faces. Even as one company, satellite still needs to compete in an audio market that includes HD formats, MP3 players and podcasts. Here are five challenges that still need to be dealt with: 1) satellite radio's share of the overall audio market is small; 2) the service's reach outside of major markets is small; 3) selling consumers on the idea that the merger is justified; 4) gaining loyalty is hard when battling digital radio and MP3 players; and 5) lack of advertiser support.
http://adage.com/mediaworks/article?article_id=115193