Jeremy Glowacki
My Mixed Feelings About the XM/Sirius Merger
By Jeremy J. Glowacki
Mar 26, 2008, 10:09

There's a part of me--the orderly, get-it-all-in-one-place guy--who is happy about the Justice Department's approval of the XM/Sirius satellite radio merger. The potential for merged music offerings doesn't matter so much to me as the idea that all of the big on-air personalities and sports options will be available via one receiver. But the other part of me doesn't like the merger at all, because it reminds me way too much of large corporations that my hero, Teddy Roosevelt, worked so hard to "bust up" in the early 1900s.

I don't even like the "Monopoly" board game, let alone what the real-life anti-competitive practice does to consumer pricing and options. It just seems to me that every time you open the newspaper (ok, turn on the TV), there's another story about the U.S. government's increasingly pro-corporation direction. It just doesn't seem healthy to me.

I recently learned the difference between Communism (where the government runs the businesses) and Fascism (where corporations run the government) and I'm starting to understand why radical 60s protesters loved to use the term "Fascist Pig" when protesting the Vietnam War. The more we, the People, sit by and allow our elected leaders to rule in favor of big business, the more we risk becoming a fascist country.

The difference with the proposed $5 billion satellite radio merger, which was announced more than a year ago and must still be approved by the Federal Communications Commission, is that neither Sirius nor XM has been a profitable venture to date. In other words, it's not exactly like the proposed combined company would actually lead to world domination. It's just that the principal of the thing feels wrong to me.

As the New York Times reported on Monday, the merger is opposed by consumer groups and broadcasters who say that it will force up prices and reduce the programming now available from the two competing systems.

The Justice Department's antitrust division announced Monday that it approved the merger after determining that prices were not likely to rise, in part because of competition from other program sources, like HD Radio as well as iPods and other MP3 players that can be connected to home or car audio systems. The deal, the agency said, was unlikely to hurt competition or consumers.

F.C.C. officials have offered conflicting signs on whether the commission would approve the merger. The commission's chairman, Kevin J. Martin, was quoted last week as saying that "I haven't figured out what I think we should do on it yet."

Mr. Martin is thought to support an important element of the deal--the creation of a so-called à la carte system of pricing, which would allow customers to choose among packages of programs instead of the full lineup that subscribers must now purchase.

The Justice Department's announcement was welcomed in a joint statement by XM and Sirius, which said a merger would lead to "lower prices and increased programming.

Monday's announcement was denounced by several Congressional Democrats who had opposed the merger as anticompetitive.

"The Bush administration has apparently never seen a telecommunications merger it didn't like," said Representative Edward J. Markey, Democrat of Massachusetts who leads the House Energy subcommittee on telecommunications. Senator Herb Kohl, Democrat of Wisconsin and chairman of an important antitrust subcommittee, said the deal would "create a satellite radio monopoly."

Gene Kimmelman, a spokesman for Consumers Union, the nonprofit organization that publishes Consumer Reports magazine, criticized the decision. "If this is what our competition cops do," he said, "we might as well close shop and save taxpayers a few hundred million dollars because they're not doing their jobs."

In a news conference, Barnett, who leads the Justice Department's antitrust division, insisted that the department did not view the merger as creating a monopoly. He said that radio listeners had many other choices for programming, and that the alternatives would only grow.

"Some people may view iPods as a particularly good alternative," he said. "They may view HD radio as an alternative." He said that much of the programming now available on XM and Sirius might soon be available through wireless broadband connections on the Internet or cellphones.

It's strange logic, but apparently the Justice Department bought it.


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