More Sirius-XM News

More Sirius-XM merger news from the NY Times.

This time it's an article describing the CEO of Sirius Radio, Mel Karmazin. The article provides a nice description of Mr. Karmazin and his enthusiasm for a successful merger.

Last week, Mr. Karmazin took his campaign to win over lawmakers and regulators to Washington with his pitch that a single satellite radio company would mean more choice and lower prices for consumers — rather than create a foreboding monopoly, as his former chums in the terrestrial radio business contend.

Speaking before an antitrust task force of the House Judiciary Committee, Mr. Karmazin said he was shocked by the very idea that anyone would see a monopoly as the logical result of merging the only two satellite radio broadcasters. “There is no monopoly or duopoly,” he told the hearing. “That’s the most bizarre thing I have ever heard.”

Sirius and XM on Capitol Hill

As mentioned below, Sirius and XM are starting to ramp up their efforts to get their merger blessed.

Earlier today I happened upon their hearings on C-SPAN and was not surprised by their arguments. They maintain, of course, that there are innumerable ways for competitors to compete with satellite radio. Here's a brief list:

• Large terrestrial radio companies could provide high-quality nation-wide radio
• Cell phone companies could use their networks to distribute content which could then be played over car or home stereos via blue-tooth (yes, seems quite convoluted)
  
• A collection of 802.11 networks could be used to transmit high quality radio

I didn't watch for long, or else my list would be a lot longer.

I'm not sure how I feel about a merger. On the one hand, it seems that satellite radio is a true paradigm shift and that for other companies to provide similar services they'd have to do it through the satellite radio network. On the other hand, satellite radio doesn't seem that great. If it can't be outdone then I'd be amazed. And, I think, if the merger leads to better solutions, then let it go ahead.

Sirius and XM go to Washington

Both the Sirius and XM satellite radio companies have gone to Washington to try and sell their merger the NY times reports.

No doubt, we'll be seeing more of this lobbying as the antitrust storm starts to gather. And, as market definition is often the main issue in antitrust cases, look for lobbying about what constitutes the satellite radio market.

In short, the fundamental question is this: is satellite radio a singular market that doesn't compete with terrestrial radio? If satellite radio constitutes its own market, then the merger will undoubtedly create a monopoly. After all, there'll be only one company selling satellite radio services. However, if it is determined that satellite radio competes with terrestrial radio, then it is less likely that the merger will result in a monopoly.

The companies won't hinge their entire argument on market definition. They'll be discussing other factors too. They'll argue that the merger is necessary to ensure the success of each company and advancements in the technology. They may also argue that by merging they are providing enhanced services to the consumers; minimizing their uncertainty about which product to buy. However, these tend to be issues that courts don't care about. The tendency is to let the market take care of those issues.