The Satellite Merger

Maybe I am missing something, but the FCC (and before that the Department of Justice) have taken almost two years to ultimately approve the merger of XM Satellite with Sirius Satellite Radio.

Did the DOJ and FCC really need all that time to do what many of us knew they would do anyway?

The entire process is a joke.

Keep in mind that a condition of approval to allow XM and Sirius to operate back in 1997 was that the two companies must never merge.


When the two satellite operators finally had to embrace each other to gain major economies of scale in an industry burdened with huge technology costs such as -- say, launching replacement satellites (no cheap thing), the sanctimonious opposition reared up and prepared to fight.

Then elected officials blustered their way against the deal even as the DOJ dragged its feet. Then, once the DOJ gave the green light it was up to the FCC to make the final call.

FCC Chairman Kevin Martin made it a few days ago.

He said he was going to recommend the merger (surprise) which is likely to mean approval (surprise) since his two Republican commissioners are likely to guarantee a 3-2 ruling.

I don't have a problem with two satellite companies becoming one if the FCC doesn't have a problem. What I have a problem with is the hypocrisy that surrounds the conditions to approve this monopoly.

When the only two companies in satellite radio become one it is -- well, I don't want to say the word again. You know.

But who cares if they merge.

Maybe the National Association of Broadcasters cares -- but they've got nothing else to do with their money. They see satellite radio as a big threat to terrestrial radio. Seriously -- find something worthwhile to fight.

They could fight the unfair Internet streaming royalty because it may bite their constituents in the butt someday. Or spend more resources on beating back the record labels' attempt to undo the performance tax exemption for radio. Nah.

Satellite radio has been a money losing proposition from launch. They have not bothered anyone including terrestrial radio which somehow got the idea that satellite radio was its competition.

Look at the farce the FCC is making out of this merger -- a merger most commissioners apparently want. I guess the merger proponents at the FCC just don't want anyone to think they are creating a monopoly -- which, of course, they are. But since satellite radio is a money losing business, you don't get the sense too many people are outraged about it.

Here are some of the terms of the agreement between Martin and the merger principals according to The Washington Post -- and keep in mind that they may not be through coming up with more meaningless, cockamamie conditions before the deal gets done:

Place price caps on programming and offer a la carte programming so that subscribers could pick programs they want and not have to subscribe to all channels or certain packages. Officials with XM and Sirius said they would offer radios configured for a la carte programming within three months of the merger.

This is a meaningless condition because a la carte programming may turn out to hurt consumers in the pocketbook eventually. I thought the appealing thing for satellite radio customers was all those channels -- not fewer channels at less money. This is the FCC pretending to be consumer advocate.

Open their technology standards to any radio-device manufacturer, paving the way for consumers to buy radio transmitters from retail stores. Currently, subscribers must buy directly from XM and Sirius, or through car manufacturers that have installed the devices in new cars.

This is a punishment? Please! Thanks, FCC, for helping us wind up on all types of radios and, by the way, the customer is still going to have to pay us to activate service. So, if radio manufacturers want to spend more to include satellite, all the better for -- satellite radio.

Provide interoperable radios. Current subscribers have radios that deliver programming from either XM or Sirius. Within one year of the merger, these listeners will receive radios that could access programming from both providers.

The FCC required this at the time of approval and apparently they let the two satellite networks get away with noncompliance until -- now. Now they are mandating interoperable radios as if they just thought of the idea for the first time. This is the FCC channeling its bureaucracy.

Each set aside 4 percent of their radio spectrum's, or 12 channels, for noncommercial services such as educational and public safety programming. They would lease another 12 channels for programming run by minorities and women, groups that are underrepresented in entertainment broadcasting.

They're kidding, I hope. Betcha the ratings for satellite radio in ten years will not include these ransomed channels. Betcha no one listens to these "set-asides". A satellite radio customer is paying for programming options, not access channels. This is the FCC at its political worst.

So, approve the merger, already.

Most people are alright with the monopoly part.

It's pandering to private interests in order to justify the merger that is the hardest part to swallow.

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