If Terrestrial Radio Broadcasters Don't Compete With Satellite Radio... Why Are They So Concerned With The Merger?

from the you've-got-some-explaining-to-do dept

We've talked about the debate concerning whether or not XM and Sirius should be allowed to merge a few times. Those who are worried about it creating a monopoly seem to ignore the fact that the market isn't for "satellite radio" but for audio entertainment -- which goes well beyond satellite radio to things like terrestrial radio, HD radio, iPods, podcasts and much, much more. It seems like a no brainer. However, there's almost no way to make sense of the testimony of David Rehr, President of the NAB, to the House Judiciary Committee on why the merger should not be allowed. He starts out by saying that the merger would create a monopoly. However, if that's true, then it's not clear why he's an interested party at all. He's there representing the terrestrial radio broadcasters -- and the more that he complains about this merger, the more that it sounds like those broadcasters absolutely do view the satellite radio companies as direct competition. In fact, the terrestrial broadcasters have publicly admitted that they face strong competition from satellite radio. If those broadcasters are so worried that the satellite radio firms would "abuse" their so-called monopoly position to raise rates, then wouldn't that represent a huge opportunity for terrestrial radio to win back listeners?

In the meantime, we're still wondering how the NAB can say with a straight face that satellite radio doesn't compete with terrestrial radio, while at the same time demanding a relaxation of media ownership rules and using satellite radio as an example of why old media ownership rules no longer apply. That NAB page says: "The FCC should relax unreasonable ownership restrictions on the media. Broadcasters believe that these decades-old rules should be updated to reflect the dramatic changes in the media marketplace, including the growth of cable TV, satellite TV and radio, and the Internet." So, apparently, satellite radio is competition when it comes to media ownership... but not competition when it comes to mergers?

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  1. identicon
    Leroy, 1 Mar 2007 @ 6:13am

    sticking to my guns

    I'm sticking to my guns, my prediction that the merger will not take place. The same scenario can be found in television and the discussed buyout of directv by dish network.

    I predict one of the major auto manufacturers will buy XM or sirius and manage it properly. Maybe Ford, maybe Honda, maybe toyota.

    I think the regulators will see XM more in the role of a common carrier than a broadcaster and will look towards the future of satellite radio and the loss of competition as it would effect that medium not only next year but 20 years from now. If they merge, there will be no marketplace.

    But if, say Ford buys XM and Toyota buys Sirius, then they can grow the industry and push the technology and turn them into a true marketing tool. Imagine if Ford owns XM that gives them the ability to manage all those channels and not a single Toyota or GM advert to be found on any of them!


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