Yesterday on CNET News.com, my colleague Richard Derfendorf wrote about the impending decision on the part of the FCC to either allow or deny the merger between XM radio and Sirius Satellite radio.
According to Derfendorf, the FCC is "inching closer" to making a decision on the deal and does not look "as daunting" as it once did. He went on to explain that some analysts believe the long wait (a little over 400 days) is actually working in the satellite companies' favor.
And while all that may be true, there's something going on behind the scenes that shouldn't be overlooked. The fact that XM and Sirius were forced to wait this long to finally receive a decision is both ridiculous and just plain wrong.
Unfortunately, you can bet ClearChannel Radio and other terrestrial monsters have something do with it.
What exactly is so bad about the XM-Sirius merger? Some critics say the company, as the only provider of satellite radio, could jack prices up to finally move into the black. And while that is always a concern to some, the two companies have already published postmerger pricing plans and believe it or not, it'll actually cost you less to enjoy satellite radio. Ironic, eh?
Realizing this, some have said that the lack of competition could produce a situation where all of the radios that have been improved at such a rapid rate will suddenly turn to crap as the companies have no reason to produce nicer radios. Talk about grasping at straws.
Next, and most importantly, deal detractors say that the merger would create an environment where this single company would control all facets of the industry and the lack of competition would mean, gasp, a monopoly that's in violation of section 7 of the Clayton Act that clearly states that no merger should be approved if competition is substantially lessened.
Of course, that assertion is not only sadly misguided, but those who espouse that belief fail to look at the big picture.
At its very core, a merger between XM and Sirius has nothing to do with a monopoly and everything to do with increasing the very competition that detractors are trying to rail against.
As it stands, XM and Sirius on their own are performing poorly. Sure, Howard Stern has helped Sirius increase subscribers to a healthy level, but the company's current cash outlay to maintain the business are simply too high. The same can be said for XM.
But if these two companies finally merge, they could reduce overhead expenses, leverage assets far more efficiently and finally compete in an incredibly competitive market. And to say that there's no competition in the satellite radio game is simply false.
Satellite radio is the same exact radio as anything ClearChannel pumps out, but you're forced to pay for it and it's not regulated by the FCC. Aside from that, you can listen to both company's content in your car or at home.
How can anyone with common sense possibly say that the only competitor facing Sirius right now is XM and the only competitor facing XM is Sirius? Aren't both services competing for the same listeners as those who might listen to Rush Limbaugh or Jim Rome? Isn't it possible that those same listeners may also decide to listen to XM or Sirius personalities?
Competition is not only measured by the number of companies in a market, but by the customers available to use different services. As far as I'm concerned, the smallest radio station in your area is just as much a competitor to Sirius as XM. Why? Because you have every right in the world to listen to both. The only difference is that you're forced to pay for satellite.
There is no reason why XM and Sirius were forced to wait this long for the merger to be approved. Unfortunately, it looks like the FCC, which is notorious for its desire for control, wants nothing more than to make sure this deal is denied unless major radio enterprises OK it and it can exert influence on the content.
But as the days wear on and more pressure is being placed on the FCC to make a decision, the more likely it is to finally give in.
Let's hope that happens soon.