Ray T. Mahorney (rmahorney) wrote in xm_radio,
Ray T. Mahorney

FCC hears pros, cons of Sirius-XM deal

FCC hears pros, cons of Sirius-XM deal
Opponents, supporters of satellite radio union lay out positions

By Brooks Boliek
Reuters/Hollywood Reporter

Updated: 8:23 a.m. CT July 10, 2007


WASHINGTON - Opponents and supporters of the proposed Sirius-XM deal, which
would shrink the satellite radio universe to one provider, laid their pros
and cons before the Federal Communications Commission Monday.

Although little new ground was broken, the groups - ranging from the
National Association of Broadcasters to Women Involved in Farm Economics -
gave the commission an earful as the deadline for comments in the merger

In its petition to deny the merger permission, NAB contends that the merger
would harm consumers by creating a government-sanctioned monopoly where one
didn't exist before.

"The proposed merger would create a monopoly in the national satellite
(radio) market, which would inevitably result in increased prices, fewer
programming choices, less local programming for radio listeners and other
public interest harms," NAB said. "(Sirius and XM), however, have not even
come close to meeting their burden of demonstrating by a preponderance of
the evidence that there are 'extraordinarily large, cognizable, and
nonspeculative efficiencies' that justify the creation of a monopoly."

NAB was backed by a group of public-interest groups with which it has
usually feuded.

The Consumer Federation of America, Consumers Union, Common Cause and Free
Press asked the FCC to reject the companies' proposal to define the market
to include all forms of one- and two-way communications services.

"Approval of a merger based on an overly broad definition of the market is
likely to result in rising prices, denial of choice, declining quality and
slowing innovations," CFA research director Mark Cooper said.

Definition is key
How the FCC defines the market is a critical question. If the commission
buys the companies' argument that the market ranges from traditional radio
to the Internet, then merger approval is easier. If, on the other hand, it
defines the market as just satellite radio, then a merger analysis that
recommends approval is much more difficult.

"The merger of XM and Sirius satellite radio can only be called one thing -
a monopoly - leaving no choice or competition in the satellite market,"
Consumers Union vice president Gene Kimmelman said.

Broadcasters weren't the only ones with grassroots support. A coalition of
groups including the NAACP, Americans for Tax Reform, the League of United
Latin American Citizens and Women Involved in Farm Economics filed comments
supporting the deal.

Minority groups and rural dwellers believe that the merger will strengthen
niche programming, lower prices and give them more control over what they hear.

Sirius CEO Mel Karmazin touted the groups' support.

"The support for our merger is as diverse as the programming we provide,"
Karmazin said. "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."

XM chairman Gary Parsons said that the filings demonstrate what the
companies have been telling policymakers at the FCC, the Justice Department
and Congress.

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

In telecommunications matters, a pair of agencies must approve the merger.
In this case, the Justice Department examines the deal for its effect on
competition, while the FCC decides if it is in the public interest.

If approved, the combined value of the company would be about $13 billion,
which includes net debt of about $1.6 billion. The combined company would
have about 14 million subscribers.
Copyright 2007 Reuters Limited. All rights reserved. Republication or
redistribution of Reuters content is expressly prohibited without the prior
written consent of Reuters.

URL: http://www.msnbc.msn.com/id/19692258/
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