WSJ Notices That The NAB Has An Agenda

from the nice-one dept

It’s been pretty clear for some time that the National Association of Broadcasters’ opposition to the merger of XM and Sirius isn’t based on any concern for the public, as it would like you to believe, but rather is an attempt to get the government to bolster its struggling business because it doesn’t want to compete in the marketplace. We’ve pointed out before that it’s that behavior that rankles us in this case, rather than any real desire to see a merged XM-Sirius. What the NAB is doing — the astroturfing, the paid shills, the conflicts of interest, the not-so-independent research, and most of all, the utter hypocrisy — is representative of so many other entrenched industries that will do anything and everything they can to avoid having to actually compete in the marketplace. With all that in mind, it’s nice to see people starting to catch on that the NAB’s self-serving agenda means it really shouldn’t have any part in the debate about the XM-Sirius merger, as The Wall Street Journal did over the weekend. As an editorial in the paper put it:

“No one knows whether the public will ever really take to the pay model, but it’s not the role of the government to help the NAB smother a fledgling competitor in the crib… Telecom policy should not be about picking winners and losers but about encouraging investment and innovation. For that to happen, what’s most important is competition among technological platforms: cable, telephone, wireless and satellite (for now). Policy makers and regulators would do better to focus less on static models of market share within one platform and more on making sure rival platforms continue to exist. Consumers will happily take care of the rest.”

That cuts to the heart of the issue: the NAB wants the government to give it, in essence, a subsidy to protect its business — just as it’s tried to do so many times before, with so many other technologies. Blocking this merger won’t block anticompetitive behavior from XM and Sirius, it will empower anticompetitive behavior from the NAB’s terrestrial radio membership.

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Comments on “WSJ Notices That The NAB Has An Agenda”

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Justanotherjim says:

What with all the crap thats on the radio today, its interesting to look at this story as a very similar, and unsurprising story. Radio is directly tied to the recording industry, and this is a perfect example of people just not quite giving a shit anymore. Write the laws any way you want, its still the same old crap, with a new name.

For me, the bottom line is this. I don’t care what they do, any of them. I don’t watch too much t.v, and I don’t turn on the radio anymore either. This whole discussion is about greed, and failing business models. And frankly, I am way over giving up one third of my life for advertising, and talk, talk, talk. Let them merge, let them go away, who cares? Not I. And the idiots who are making the laws will undoubtedly pass laws in favor of the broadcasters cause they have all the politicians in their pockets. So again, who cares. Turn all the crap off and get out and live!!!

Rob (user link) says:

Re: Re:

For me, the bottom line is this. I don’t care what they do, any of them. I don’t watch too much t.v, and I don’t turn on the radio anymore either.

Amen. Radio is controlled by the recording industry, television is controlled by MTV and/or those with a political agenda.

TV and radio programming that entertains (or attempts to) without pressing an opinion is a rarity these days. I’ll stick to downloaded episodes of “Fibber McGee and Molly” or “Duffy’s Tavern” for radio, and Simpsons / Family Guy DVDs for television.

I watch TV to take my mind off of the issues, not to have someone else’s opinion of the issues fed to me.

ARunnymeade says:



I’m confused by the last statement in your message. Are you suggesting that a merged XM-Sirius couldn’t exert anticompetitive power, or simply that they wouldn’t exert monopoly power? If you believe the former, then you must believe that there is a viable alternative to satellite radio, i.e., something to check the anticompetitive behavior. If you believe only the later — that XM-Sirius would be a good corporate citizen without competition — then I believe it’s time for you to step down from the ivory tower and join us in the weeds of reality.

For sake of argument, I’ll assume that you believe that there is a viable alternative to satellite radio — namely terrestrial radio, iPods, limited Internet Radio, CDs, and in-car humming. And I’ll assume you believe that collectively, this competition is enough to keep XM-Sirius from raising prices for satellite radio. Do you also believe that an XM-Sirius combination would not exert monopsony power over national programming — including, but not limited to, sports programming? You cleary have a firm understanding of the economic principles at play here. I would love to hear your take.

I would also like to point out that the previous two comments are idiotic.

Carlo (user link) says:

Re: Confused

The assertion that some people are making that a merged XM-Sirius will automatically raise prices is fallacious, because, as you point out, these companies don’t compete in a vacuum. They don’t just compete with each other, they compete with so many other forms of entertainment and programming for subscribers’ dollars. A merged company will still face sufficient competition that will keep them from raising prices, ceasing innovation and offering poor products — ie exhibiting behavior typically associated with monopolies.

I’m not sure why monopsony power would be an issue here. I guess you’re thinking that the satellite companies would pay less for sports and other national programming since there will only be a single buyer. I’m not certain how that’s a problem meriting government intervention or interference.

ARunnymeade says:

Re: Re: Confused

Would it be okay if there were just one cable television provider in the US, and no satellite television? By your line of thinking, it would be okay. You would still have broadcast television, the Internet, video games, DVD players, et al. And, presumably, those entities would be enough to check a cable monopoly’s price increases by stealing away viewers, But no one would seriously suggest that a nationwide cable monopoly is good for consumers. Why is satellite radio different? Sure, satellite radio does not operate in a vacuum, but that’s not the threshold for a proper antitrust analysis. The fact remains that XM and Sirius are the only two entities that provide a true nationwide audio service. A merger would drop that number to one. And it would drop it to one at a time when satellite radio is still a relatively infant service, before the reach and impact of the service is fully realized. Imagine, again, if cable television were aloud to operate as a monopoly since the late-1970s. Would the service be as dynamic as it is today? Doubtful.

Monopsony power is an issue in this case. Just because relatively few entities would be impacted does not eliminate it from antitrust consideration. The simple fact is that programmers, both large and small, will suffer from an XM-Sirius merger, especially when the merged company begins to pass a comfortable threshold of listeners, say 30 million.

Finally, it’s important to note that a merged XM-Sirius would have a lot of left-over spectrum — after eliminating program redundancies — and would likely use that extra spectrum to attack local advertising markets. With no check in the national market, XM-Sirius could exert monopoly power through cross-subsidization, undercutting local ad rates and driving local stations out of business.

There is more than one way to skin a cat.

Anonymous Coward says:

Re: Re: Re: Confused

“The fact remains that XM and Sirius are the only two entities that provide a true nationwide audio service.”

What a load of crap. There is nothing factual about that statement whatsoever. Any other satellite music providers such as DMX are direct competitors. Also, have you ever heard of “Clear Channel” or “Westwood One Radio Network”? XM/Sirius would be no more an monopoly than any of them, and that’s just a handful– there are plenty more national audio services out there.

ARunnymeade says:

Re: Re: Re:2 Confused

Are you seriously touting DMX as a viable alternative to XM or Sirius? I think we can drop your load of crap right next to mine.

But your second point requires some examination. Clear Channel is a very big radio group (although it’s getting smaller) with more than 1,100 radio stations in the US. But that represents less than 10 percent of all terrestrial radio stations. In order to listen to hear all Clear Channel stations in the US, you would have to literally drive all over the country (or visit all of their individual radio station Web sites). As local radio stations, each Clear Channel entity has only limited reach. I understand that I’m stating the obvious, but it’s an important point. Clear Channel’s power to check XM/Sirius, even in a local market, is limited to the max number of stations it owns in a market — 7 or 8 at the most. Against 200-300 satellite radio channels, that’s an impossible task — particularly if satellite radio starts to offer some of their channels for free on an ad-supported basis, a very real possibility post merger.

Westwood One Radio Network is, as the name suggests, a network — not a radio station group. They merely provide content to radio stations. Unlike an XM/Sirius combination, they have no control over the distribution channel. As such, their ability to check the monopoly is weak at best. This isn’t an issue of voice diversity, it’s an issue of economic power.

I understand the appeal of attacking the big, bad radio conglomerates to bolster your argument. But like a crass joke to gain cheap laughs, the tactic only gets you so far.

Mike (profile) says:

Re: Re: Re:3 Confused

Clear Channel’s power to check XM/Sirius, even in a local market, is limited to the max number of stations it owns in a market — 7 or 8 at the most. Against 200-300 satellite radio channels, that’s an impossible task — particularly if satellite radio starts to offer some of their channels for free on an ad-supported basis, a very real possibility post merger.

Wait, wait, wait… what happened to you and your colleagues (btw, would you care to admit where you work?) insisting that terrestrial radio stations don’t compete with satellite?

You just said they would. So, uh… which is it?

Beefcake says:

Re: Re: Re:3 Confused

Firstly, DMX offers residential, subscription service anywhere in North America (including Hawaii). Couple that with their cable tv rebundle which serves millions throughout the globe, and yeah, I’d say they’re viable. They just don’t spend money having David Bowie do television commercials. Sorry, but your load of crap steams alone.

You seem to have chosen to forget that I was responding to this statement you made: “The fact remains that XM and Sirius are the only two entities that provide a true nationwide audio service.” With 1100 stations (your figure), I’d say they qualify as a competing, nationwide audio service.

Westwood One may not be a radio station group, but they provide content to just about every market I can think of– sounds like a “nationwide audio service” to me.

So to sum up, you started out by arguing that there are no other “nationwide audio services”. When it was pointed out to you that there are numerous other “nationwide audio services”, you changed your argument to reclassify the given examples as “not viable” or “not monopolies” or “not radio stations”, none of which had anything to do with the challenged statement.

You still haven’t addressed how an XM/Sirius merger creates a “monopoly”.

Schriever says:

satellite monopoly

The post by ARunnymeade is intelligent and thoughtful. I actually work with NAB on this issue and people forget that traditional radio is free and the folks at XM/Sirius are the ones who want the government to subsidize their business. The companies are infants and they have made poor business decisions thus far. Why not let the market work itself out rather than allow a national monopoly that would seep into local terrestrial radio markets?

Carlo (user link) says:

Re: satellite monopoly

Seriously, how can you say “Why not let the market work itself out” and advocate that the government interfere and block the merger?

If you want to let the market work itself out, that means getting your pals at the NAB to drop their opposition to the merger and take on the satellite companies in the market rather than in the corridors of Washington.

Schreiver says:

Re: Re: satellite monopoly

You and your pals at XM/Sirius just want the government to save them. Maybe they should have thought twice about offering millions to Howard Stern and Opie & Anthony.

Traditional radio operates over the public’s airwaves and citizens deserve to have access to free programming of all varieties. As a monopoly, XM/Sirius would have the ability to dip into dozens of large local markets, and undercut not just national advertising, but local advertising as well. Despite what you may think of traditional radio, communities deserve access to free radio. The Globe (94.7fm) in DC is now a superior advocate for environmental change. This radio station is going above and beyond traditional programming yet a satellite monopoly would prevent these types of initiatives.

I have nothing against satellite radio I just don’t want a single company controlling an entire industry.

Carlo (user link) says:

Putting words in my mouth isn’t going to prove you right, nor is positing straw men.

You ignore the fact that XM and Sirius, should they merge, can’t simply stop competing. They face an uphill battle, even as a single entity, to convince enough people to pay their subscription fees. They then face the ongoing challenge of hanging on to those customers. Any monopolistic or anti-consumer behavior will be punished by the marketplace, in the form of people choosing not to subscribe to the services.

You still don’t explain your point about monopsony power, nor how “programmers, both large and small, will suffer”. Simply because they won’t be able to extract the current prices from the satellite companies? We should all be so lucky to have government-enforced price controls for the goods and services we sell.

The final piece of your argument is nothing more than pure supposition with some big scary words thrown in for added effect.

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