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
    James, 1 Mar 2007 @ 7:00am

    Tough call

    As they (XM and Sirius) grow they are more and more, very strong competitors for FM (which Clear Channel and others have completely ruined), and they should be allowed to merge.

    My concern is merely that content might suffer. Prices will not; they can't price themselves out of the market.

    And I disagree with Leroy, the carmakers have enough issues w/o buying a company in a fledgling market that is still not cash-flow positive. What does Ford (or Toyota even) know about running a media company? Sure, Toyota could say no Ford ads on Sirius or XM but one of the main draws of sattelite radio is COMMERCIAL FREE music.

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