Groups File Against Satellite Merger; Karmazin To Address NPC

The FCC received petitions from a handful of groups Monday (July 9) to deny the proposed $13.6 billion merger of Sirius Satellite Radio and XM Satellite Radio. The NAB in its petition called XM and Sirius' proposal "a simple and straightforward case" and said the merger should not be permitted. In a 57-page joint petition filed by Common Cause, Consumer Federation of America, Consumers Union and Free Press, the groups told the FCC "this merger to monopoly must be rejected."

The groups addressed "satellite radio's unique product and geographic market characteristics," noting that "satellite radio possesses a unique bundle of characteristics that clearly distinguishes it from other audio entertainment products. These characteristics reflect fundamental traits of the license and the technology used to exploit it."

The petition also addressed "the rapid growth of the satellite radio market," pointing out that 14 million subscribers have signed on to the service in just five years and that "subscription[s are] expected to rise to as high as over 40 million within the next few years." The groups added, "The fact that satellite radio will not drive terrestrial radio completely out of business is irrelevant to the antitrust and public interest analysis. Satellite radio is a substantial market that deserves the full protection of the antitrust laws and the Communications Act."

Monday was the deadline for the public to file comments to deny the satcasters' proposal to merge.

In its petition, the NAB also characterized the satcasters' union as a "monopoly." The lobbying group recalled Sirius' own argument to the FCC when it called on the agency to "preserve intra-service competition and overall DARS [digital audio radio service] diversity of programming" and prevent a "DARS monopoly."

The NAB also argues that Sirius and XM have not offered any hard evidence that a merger will serve the public interest by way of a price break benefiting consumers and notes that both companies have stated that neither is suffering a financial burden so great that one of them might cease to exist unless they merge their operations.

The NAB also said the FCC "should summarily dismiss the application as volatile of the satellite DARS anti-merger rule. In the alternative, the commission should designate the application for hearing to determine whether grant of the application would serve the public interest, convenience and necessity."

Earlier in the day on Monday, the satcasters issued a press release headlined "Sirius, XM Highlight Growing Momentum in Favor of Merger." Sirius CEO Mel Karmazin said, "The support for our merger is as diverse as the programming we provide. The thousands of pro-merger comments from organizations representing diverse populations and interests, individuals, businesses and experts plainly demonstrate that the combination of Sirius and XM is in the public interest."

"These FCC comments strongly validate our contention that the merger will produce substantial public interest benefits," said XM Chairman Gary Parsons. "These include greater programming choices, better prices, rigorous competition and more rapid innovation."

Meanwhile, the National Press Club announced that Karmazin will be the club's featured luncheon speaker on July 23. The chance to speak before the media in that setting is traditionally regarded as an honor in Washington, D.C., and the event almost always generates news. When NAB president and CEO David Rehr was invited to address the club on Oct. 4, 2006, staffers at the NAB pounded their chests with the sort of pride that means "Our guy has arrived." Such an engagement for Karmazin will mean the same thing to satcaster-merger enthusiasts and be a chance for those on the other side to collect more information to volley back at the satellite crowd.

By Jeffrey Yorke - radioandrecords.com

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