Complain about a product or service

States Raise Questions about XM-Sirius Merger

Attorneys General say merger will create monopoly

By Truman Lewis
ConsumerAffairs.com

March 29, 2008 

The AGs sent a letter asking the FCC to step in after the U.S. Department of Justice failed to block the proposed merger of XM Radio and Sirius Radio. The DOJ dismissed concerns that the merger would create an illegal monopoly by leaving the nation with only one satellite radio provider.

"A merger of XM Radio and Sirius radio meets the textbook definition of monopoly: a product controlled by one party," said Connecticut Attorney General Richard Blumenthal. "The Justice Department's inaction regarding this combination defies law, reason and common sense. Even a child understands that owning every property from Baltic Avenue to Boardwalk is a monopoly.

"This monopoly-making merger will leave Connecticut consumers at the mercy of a single company, leading to skyrocketing prices and diminished service. Customers unhappy with their service will have nowhere to go. The Justice Department's message to satellite radio consumers: Go pound sand.

"My office, in partnership with other state attorneys general, is demanding the FCC to intervene against this flagrantly anti-competitive, anti-consumer merger. The FCC can and should protect the public interest and radio consumers by killing this monopoly before it's created," Blumenthal said.

Among the opponents is the state of Wisconsin, whose attorney general, J.B. Van Hollen, said the proposed merger is anti-competitive and anti-consumer. He said its impacts will be felt in Wisconsin, particularly in rural communities, where he predicts a significant reduction in the availability of sports and other programming.

“The proposed merger would eliminate competition in the satellite radio industry and the combined XM-Sirius companies would be free to raise prices, stifle innovation, and reduce program diversity,” Van Hollen said late last year, when he wrote to Barnett asking that the merger be blocked.

The Justice Department said last week that the combined satellite company won't be able to raise prices excessively because of competition from other entertainment media, including broadcast radio and MP3 players.

There wasn't enough evidence the merger "would substantially lessen competition or harm consumers," Justice antitrust chief Thomas Barnett said.

But the deal's not done yet. The companies are still awaiting approval by the Federal Communications Commission.

FCC Chairman Kevin Martin has said the agency is close to a decision and said the FCC staff has been instructed to draft "various options."

The deal has come under fire from critics who say it would reduce competition. The critics have also questioned whether existing receivers will be able to receive what proponents have said will be greatly expanded programming options.

The proposed merger got a boost last September when former Federal Communications Commission chairman Mark Fowler said the deal would enhance competition. His comments came in a column in the New York Sun, whose parent company, Hearst Corporation, owns a stake in XM.

"In spite of the fact that satellite radio constitutes only 3.4 percent of radio listening today, traditional over-the-air radio operators have understood the potential threat and have had no choice but to compete, and have been dragged, albeit kicking and screaming, into the digital age," Fowler wrote.

The main argument that may prevent the current commissioners from allowing the merger is that it would create what critics say would be a monopoly. The National Association of Broadcasters (NAB), an industry group that lobbies on behalf of terrestrial radio broadcasters, has been by far the most vehement opponent.

"The national satellite radio market currently is a two-company duopoly trying to become a government-sanctioned monopoly," NAB president and chief executive officer David Rehr said at a House hearing in March. "The fact is, this monopoly would reduce innovation for services and equipment for consumers since there will be no competition in their defined market."

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Back to the top |