Federal Communications Commission Chairman Kevin Martin said yesterday that a proposed merger between XM and Sirius would constitute a monopoly.
Boston University T. Barton Carter professor of communication law says this is similar to the FCC’s refusal to allow Echostar and DirecTV to merge, in which they considered “satellite television” as a distinct niche from cable rather than part of a “multichannel video programming” category. Similarly, “as long as they define the market that’s in competition as satellite radio” rather than just radio, a merger would create a monopoly.
Satellite television and cable are, in most cases, in direct competition. Most people who can get dish can also get cable and vice-versa and the programming content provided is virtually identical. Indeed, if the FCC wants to spur competition, they’d be better off allowing DirecTV and Dish to merge while ruling that exclusive content deals, like DirecTV’s monopoly on NFL Sunday Ticket, are anti-competitive.
By contrast, satellite and terrestrial radio are at this point distinct animals. The former is a national subscription market and the latter a mostly local advertising based model. If XM and Sirius merged, they would have a monopoly on providing commercial free coast-to-coast radio stations, feeds of popular networks that would stay true throughout a cross country drive, and so forth. While people could obviously refuse to subscribe to their service, the merged companies would have much less incentive to keep prices down and innovate their programming than exists with two major competitors.
Full disclosure: I’m a longtime subscriber to DirecTV and its NFL Sunday Ticket package and a dissatisfied Sirius customer likely to switch to XM after my year is up.
I’ve been more-or-less satisfied with DirecTV and prefer it to cable in most respects, although its monopoly on NFL Sunday Ticket gives me much less leverage in pitting them against my cable company.
Sirius’ external interface is lousy. I don’t have a tape deck in my car, so I’m forced to rely on the FM transmitter. It would likely be just fine if I lived in a rural area or were a long haul trucker. In a densely populated metropolitan area, though, there are no spots on the FM band where there is not at least a weak signal at some point during a daily commute. Also, with the exception of NFL Network, which is pretty good although commercial laden, I simply don’t like Sirius’ programming much. Their music channels are slapdash, with the effect that the hard rock channels contain things other than hard rock, their Outlaw Country station often plays things like Loretta Lynn or Roy Orbison, and so forth.
