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Posted on 03/03/2007 7:01:52 AM PST by devane617
Former Attorney General John Ashcroft, hired by opponents of the deal, has blasted Sirius Satellite Radio Inc.'s proposed acquisition of XM Satellite Radio Holdings Inc., saying the combination would leave only one provider in the market. Ashcroft, who served as head of the Justice Department for four years until January 2005, was hired by the National Association of Broadcasters to examine the acquisition.
The NAB, which represents traditional radio broadcasters, has been a fierce critic of the acquisition, now worth about $4.4 billion, since it was announced last week.
In a letter sent on February 27 to his replacement as attorney general, Alberto Gonzales, Ashcroft concludes "... the proposed Sirius/XM merger, which reduces the number of competitors from two to one, raises most serious competition concerns."
Ashcroft compared the deal to the attempted takeover by satellite provider Echostar Communications Corp. of Hughes Electronic Corp., which would have reduced the competitors in the satellite television market in many areas from three to two.
"The Department recognized that reducing competition from three to two was anticompetitive and opposed the transaction, which was eventually abandoned," he said.
He also draws comparisons with the attempted tie-up between Echostar and DirectTV Group Inc., in which the FCC reaffirmed its rule of not granting a single commercial license for satellite TV. That deal also wasn't allowed.
"I would submit that a thorough study of consumer demands and preferences would show that terrestrial radio stations should not be considered part of the satellite radio market for the purposes of the review of the current merger ...," said the letter.
The companies' main argument for the deal being approved is that, while they are the only two satellite radio companies, they are in fact competing against the range of audio media including traditional radio, terrestrial digital radio, Internet-based radio and gadgets like Apple Inc.'s iPod.
The letter was forwarded by the NAB to lawmakers on the House and Senate Judiciary Committees.
While neither panel has authority to block the deal, the House Judiciary Committee's newly formed Antitrust Task Force has already held a hearing into the matter.
Next week it is the turn of the House Commerce Committee's telecommunications subcommittee, headed by Massachusetts Democratic Rep. Edward Markey.
The merger must receive approval of both the Department of Justice's antitrust unit and the Federal Communications Commission. The latter would have to change its rules to allow one company to hold the only satellite radio license.
Representatives of Sirius and XM were not immediately available to comment.
What Market?
This is called lobbying, it is legal, it may be unethical, but it is legal. This is the retirement plan for former politicians, you sell the influence you have left.
A far worse abuse is the common practice of having "respected" legal minds write op-ed articles coming down on one side of an issue or another without disclosing their affiliation with a person, company, etc. that has a financial stake in the issue.
Robert Bork played this silly little game during the Microsoft lawsuit, writing extensive articles in support of the lawsuit on legal grounds while at the same time collected substantial "consulting fees" from Netscape (Microsoft's rival).
If the deal is not done XM will bankrup, Sirius will pick up the pieces. This deal allows shareholders of XM, 4 shares of Sirius for each share they own. XM has made more than their share of bad decisions such as 50 million to Opera an friends, that resulted in 0 additional subscribers. As a result of Stern, NFL, Nascar, Sirius, and others in the line up, You receive a lot more bang for your $$
"...they are now asking tie FCC to eliminate their competition..."
Really? They asked the FCC to eliminate all "terrestrial" radio stations, HD radio stations, iPods, CD's, books-on-tape (I'll leave out 8-tracks?
If either XM or Sirius goes bankrupt all that means is the other buys there assets out of bankruptcy court and they combined anyway. At least by merging now they have a chance to gain efficiencies and be worth more.
I don't subscribe to either service...I listen to all that other "non-competition".
So Ashcroft would rather have both providers go out of business than merge? Ashcroft must be paid off by the RIAA and terrestrial radio interests.
Satellite radio rocks. It's the only way I get to hear G Gordon Liddy.
He whores himself out to the highest bidder just like any other politician.
Maybe I'm missing something important from a legal sense...
When the FIRST satellite radio station started the service there was no competition from other satellite radio stations, so why didn't the FCC step in then and stop it in it's tracks?
I subscribe to Sirius, have it in my cars, my home, and my business. My local radio station choices are (in order of power), Country, Oldies, Classic rock, and Country - no matter how sensitive my radio is!
The NAB must see the opportunity to kill them both with one lobbying expense. Too bad the FCC isn't also elected.
Uhhh...
You're backwards on that one.....
The company currently in financial trouble is Sirrus...look at their SEC filings...merging with XM is their bailout....
You're correct sir. Sirius is in trouble. They claim 6 million subs or so, but offering a free trial from cars on a dealership lot does not equal paying subs.
Course, I must admit, I love my XM. I dumped Sirius after the trial ran out. Their music channels were like the radio without commercials. I hear stuff on Squizz,Lucy, Ethel and Fred that NEVER got air time. Love it.
I'm with you - I have XM and love it! I don't need NFL on my radio, since I have Sunday Ticket on TV and would never be driving during those games! But I enjoy listening to baseball and ACC basketball, which XM has. Plus, Opie/Anthony and Ron/Fez are more entertaining and likeable than Howard Stern when you want lowbrow humor. As you say, music choices are better too.
The NAB is afraid of Satellite Radio. The NAB was against Satellite Radio being established in the first place. The NAB was against Satellite Radio using terrestrial repeaters in major cities. The NAB was against Satellite Radio providing any sort of local weather or traffic information.
Is it any surprise that the NAB is against a Sirius/XM merger?
Yup, you might be. Both XM and Sirius were licensed by the FCC at around the same time, but it took Sirius about a year longer to get their hardware and satellites financed and launched, so XM had a head start.
However, the FCC wouldn't grant XM a license until there was a competitive service like Sirius.
You might recall when DirecTV was launched, there was a "competetive" service called USSB that leased some of the transponders of DirecTV's satellite, and offered MTV and a few other channels that DirecTV didn't. After the launch of Dish Network, DirecTV absorbed USSB (and it's programming.)
Libertarian ping! To be added or removed from my ping list freepmail me or post a message here.
>>Well, so much for respecting Ashcroft. Money has an amazing way of changing one's perspective.<<
Does Ashcroft have a money interest here?
More related terms:
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Freedom-phobia
I bet he isn't lobbying for free. I suspect he is getting a HEFTY retainer from the NAB for his services.
Good point - I was unaware till your post and a google search that Ashcroft is a lobbyist now.
>>Ashcroft Finds Private-Sector Niche
John D. Ashcroft's firm has 30 lobbying and consulting clients. <<
http://www.washingtonpost.com/wp-dyn/content/article/2006/08/11/AR2006081101846.html
Possibly the finest Atty General ever.
Glad to see him getting the big bucks.
My subscription to XM expires 10/10/10. Hope they last that long.
Quinn and Rose in the morning makes my day.
No your wrong, Mel Karmazan (C.E.O. Sirius)is calling the shots - an it is "He" who will be the C.E.O. of the merger. That was decided by both boards, and it is Siris who holds the upper hand.( or xm wd b call in the shots) Uhhh
If your evaluation the XM/Sirius merger is limited to who the CEO is after the merger to determine which company was the most successfulprior to the merger, then believe what you want and disregard what the financial rags say......
Generally, in a merger (not a takeover) the management teams for both companies are evaluated by an outside consultant firm and they recommend to the board how the new companies executive management team should look.
They (XM/Sirrus) will be a content company (not a tech firm) and Mel Karzmazan is the best guy to fill that slot. His contacts in the entertainment world are legendary.
Gary Parsons (CEO XM)is an engineer at heart....I know, I used to work with him 20 years ago....
Sirius is not going bankrupt, merger or now. Amazon.com took nearly 10 years to turn a profit. Sirius is probably a year or two from going into the black.
Sirius and XM decided to merge because having two satellite radio companies makes no sense. It would be like if you had to buy a different TV everytime you wanted to add new stations.
The opposition to the merger is coming from terrestrial radio who are deathly afraid of even more people turning away from their 32 minutes per hour of ads and the same 15 songs being played over and over and over again.
No wonder CD sales are tanking. How many more times do we have to listen to the same old Coldplay, Five for Fighting and Jay-Z songs on terrestrial radio?
Since switching to satellite radio, I have purchased a lot more music because I discovered tons of great new music I never would have known about otherwise. Also, having the artist and song title displayed on the satellite receiver helps me to know what to buy.
Is there a way to license radio spectrum without providing the "well-connected with a competitive advantage"?
I'd say the ideal situation should have been to auction spectrum, cable and wiring rights to infrastructure maintenance companies which are restricted from hosting content/providing services over those systems/networks, and then having the infrastructure maintenance companies sell their bandwidth to the content providers / ISPs / and phone companies. Unfortunately, we cant get there from here.
No. The government should infect as few economic matters as possible. It's role here should be to protect property rights and enforce voluntary contracts and nothing else.
The Spectrum Should Be Private Property:
Is the radio spectrum a unique resource that belongs to the public, or can it be privately owned like any other good or service? Most people assume that public ownership is axiomatic—a starting point rather than the historical consequence of special interests pretending to misunderstand economics.
...scarce resources cannot be handled with efficiency or justice outside a private property regime. When a resource is "public" it will either suffer the tragedy of the commons or be subjected to political allocation on the part of privileged interests, with all the waste and calculational chaos inevitable under central planning.
I liked that article, but it was repetitive enough that I had to skim. Is he advocating a one-time auction of spectrum, or an annual auctioning? Either way, I see mostly advantages. The only disadvantage I can see is that there is the potential for certain frequencies to become a moving target year by year for wireless device manufacturers. I believe that each device needs to be tweaked for the individual signals. Miniturization of antenna in portable devices will make smaller wavelength spectrum incredibly expensive. Not that that is a problem. Also, in the case of companies that the government grants cable and telephone wiring monopolies to, the ability to bid on radio spectrum becomes a competitive advantage.
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