Why the FCC's treatment of the XM-Sirius merger is an abomination
After a process that took more than a year and officially set the record for the most ridiculous merger mulling in the history of the United States, the FCC finally approved the XM-Sirius merger by a 3-2 vote down party lines.
And although its treatment of this deal was bad enough over the past year and a half, the final outcome is even worse. It not only solidifies my belief that NAB has the ear of the FCC, but that both organizations are extremely concerned that satellite radio will finally become a major force in radio.
According to reports, "the companies agreed to a three-year cap on prices, set aside 8 percent of their channel capacity for minority and noncommercial programming, and agreed to pay $19.7 million for past FCC rule violations. The companies also agreed to bring interoperable radios to the market within a year."
On top of that, the FCC will embark on a new initiative to explore the possibility of including HD radio functionality into the XM and Sirius radios. That said, it didn't go so far as to make it a requirement just yet.
And while some believe that this deal is a major blow to terrestrial radio, I think that argument is hogwash. The reality of the situation is that XM and Sirius were led around by the nose while the FCC and companies like Clear Channel did everything they could to weaken the two firms.
Is an XM-Sirius merger creating a monopoly? Not a chance. Instead of droning on about this simple fact, suffice it to say that the iPod and countless other radio stations all across the United States are enough competition to prove that this merger doesn't create a monopoly.
The fact of the matter is this: if terrestrial radio and satellite radio are competing for the same listeners in the same places, there is no monopoly. And last time I checked, I can switch between Sirius and FM in my car anytime I want.
And what about this three-year price freeze? What a load of garbage. Why are we now forcing these two companies to keep pricing levels the same as expenses and other operating procedures continue to be a hindrance?
The FCC believes the newly-combined company would raise prices in seconds to address its financial troubles and thus, hurt consumers. But if you ask me, I don't think the federal government should get in the way of how these companies run their business. If it fails because of its own wrong-doing, so be it. But if it fails because the government said it couldn't raise the price when it needed it most, that's unacceptable.
I'm not saying that the company should raise prices to a ridiculous level, but I do believe that it probably does need to increase them a bit to add cash flow as it tries to reduce expenses and refinance debt. Not to mention, I'm a firm believer in the value of supply and demand and if prices get too high and demand drops off, the companies will find a happy medium that reflects the desires of both consumers and themselves.
And perhaps that's where I take issue. It's not that we have self-righteous politicians pretending that they actually care about the consumers, but it's the fact that those politicians have a thinly-veiled agenda to ensure that satellite radio is kept in check so as to not harm terrestrial radio.
Sure, the NAB wanted more regulations, but lets not forget that as these companies waited well over a year for this decision to come down, they've bled money and become far less stable in the process. And although some look at this like a win for satellite, I don't believe it.
Going forward, XM and Sirius will face the overzealous eye of the FCC and hear complaints from all sides that they didn't hold up their end of the bargain. All the while, Clear Channel and the rest of these companies will do evertyhing they can -- and that's a lot -- to ensure XM and Sirius never become a viable organization.
XM and Sirius may have emerged the victor today, but they have a long and arduous battle ahead. And based on the way the FCC and the NAB have acted over the past year, things will only get worse from here. And sadly, that's totally unwarranted.
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Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
"There?s apparently an olive branch in Friday?s decision ? the Wall Street Journal?s Amy Schatz says the FCC will issue a Notice of Inquiry about whether future satellite radio receivers should carry HD circuitry, so they can pick up local HD signals. Not analog signals, just the digital signals, which would theoretically spur more stations to think about going HD."
http://tinyurl.com/5pa7cf
"Ibiquity Fears Open Access Will Not Help Adoption Of HD Radio"
"I have said it before, and I will say it again. HD Radio has a responsibility to market itself. They should not be out looking for business model hand-outs. They should not be trying to circumvent negotiations with OEM?s by getting into car dashboards on the backs of the negotiations that Sirius and XM have made, and by extension, on the backs of shareholders in the SDARS companies."
http://tinyurl.com/6pgnq2
Should the FCC mandate that all HD radios include Satrad? What is really happening is that iBiquity/Struble knows that consumers don't want their junk technology, which doesn't even work, so they try and force it onto consumers. Now, NPR wants to revisit the issue, even after open access has already been agreed upon, and exclude analog radio in satrad receviers. I hope that this request spurs non-HD broadcasters to join Bob Savage of WYSL in his fight against this destuctive jamming technology. Of course, it is the NPR stations, which bilked Congress out of millions, who want to jam the smaller broadcasters off the dial. The FCC, when they authorized this jamming machine, declared that the marketplace would determine the fate of HD Radio.
The NAB simply did not propose, agree to, or endorse any of the conditions you're complaining about -- not even the HD Radio notion that may go to a notice of inquiry. That one came (unsurprisingly) from iBiquity, and some lawmakers later picked it up.
Rather, the NAB dedicated its once-fearsome lobbying machine to defeating the merger entirely, and never proposed any compromise or slate of conditions. This is not a win for the NAB, it's a huge defeat. It is not proof of their ascendancy at all -- quite the opposite.
Time will tell.
- by cporpheus July 28, 2008 2:47 PM PDT
- I totally agree. If XM-Sirius cannot become a viable business, then government over-regulation killed it.
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