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Sirius, XM Merger Gets FCC Approval
Multiple readers, including koavf, have written to tell us the FCC has finally approved the Sirius-XM merger that has been in the works for quite a while now. CNN has picked up AP coverage as well. We discussed approval of the merger by the Justice Department a few months ago. From CNN:
"The Federal Communications Commission voted 3-2 to approve the buyout, with the tiebreaker coming Friday night from Republican commissioner Deborah Taylor Tate. Tate had insisted that the companies settle charges that they violated FCC rules before she would approve the deal. The companies agreed this week to pay $19.7 million to the U.S. Treasury for violations related to radio receivers and ground-based signal repeaters. FCC Chairman Kevin Martin confirmed the final vote Friday night. 'I think it's going to be, in the end, a good thing for consumers and be in the public interest,' he told The Associated Press."
In the beginning, there were a lot more ads on satellite radio. One of the two companies (I forget which) decided to focus on ad-free music channels; amazingly, the other company reduced the number of channels with ads as well. Post-merger, I'm concerned that Big Satellite (B.S.) will finally take aim at the terrestrial market. With only one satellite service type, how long until we see automobiles that come with a free B.S. receiver but the terrestrial receiver (AM/FM) costs extra? To me, though, it comes down to the apparent difference between Republican and Democratic oversight: Republicans reject regulations unless a direct fault can be seen (well, satellite competes with terrestrial, so it's not a monopoly) whereas Democrats demand regulations unless a direct fault can be guaranteed not to happen (well, they could become a monopoly, so forbid them from merging). I'm curious how much the FCC could "change" this decision in a year, should the executive branch return to Democratic hands.
You miss the point entirely. Honda has a monopoly on Honda Civics. Only Honda is allowed to make a Civic by law. Despite this, we don't consider Honda a monopoly, simply because there are lots of other cars by other companies that we consider "civic like" such that you can easily find an alternative. If Honda was to double the price of a Civic tomorrow, you would just by a different car and feel only mildly annoyed.
On the other hand, if Honda was the only one allowed to build cars in general, we would call them a monopoly. Many people need a car and have no real alternative to a car. Sure, airplanes, trains, and buses compete with cars, but they compete poorly in many instances. Only a car is going to drive you 25 miles through a New England winter from one small town to another.
The Sirius and XM merger is not a big deal for two reasons.
1) There are lots of alternatives. If the price of cars doubled, many people would simply shell out double the cash to get one. If the price of XM/Sirius doubles without a quality improvement that people find fair, they will simply stop using the service. Free AM/FM radio are direct competitors with satellite radio. MP3 players are also direct competition for satellite radio. I can't substitute riding the bus for buy a car in many instances, but it is pretty trivial to substitute an iPod for satellite radio.
2) There is going to be only one satellite company, like it or not. Neither Sirius or XM are profitable. One of them WILL go bankrupt in the next couple of years. Once that happens you will be left with... one satellite radio station. They are begging to be allowed to merge because they want the destruction of the companies to be productive, rather then have one scattered to the wind while the other scrambles to pick up the pieces.
Like it or not, there will be only one satellite radio station. The only question is if it is going to happen in a couple of years when one finally throws in the towel, or because they merged and combined programing in an attempt to better compete with AM/FM and MP3 players.