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Opinion
Mar. 25, 2008
Copyright © Las Vegas Review-Journal

EDITORIAL: On the air

Common sense prevailed at the Justice Department on Monday when officials rejected the notion that satellite radio is a vital consumer entitlement that must be regulated like electricity or water utilities.

Instead, Justice said the two existing satellite radio providers could move forward with a proposed merger.

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    • "The likely evolution of technology in the future, including the expected introduction in the next several years of mobile broadband Internet devices, made it even more unlikely that the transaction would harm consumers in the longer term," the Justice Department said.

    The usual suspects were up in arms, of course. Allowing Sirius to absorb XM is somehow a threat to the future well-being of the republic, self-styled "consumer advocates" complain.

    "If this is what our competition cops do, we might as well close shop and save taxpayers a few hundred million dollars because they're not doing their jobs," said Gene Kimmelman, the Washington lobbyist for Consumers Union, nonprofit publisher of Consumer Reports magazine.

    This is pure poppycock.

    How, precisely, will this merger hurt anybody other than employees who may lose their jobs? Satellite radio is a luxury item. Given that neither company is making any money at the moment, a merger is a natural progression of a nascent marketplace. Shareholders had no objection. Would Mr. Kimmelman prefer that both companies dry up and go away? How would that help consumers?

    Unfortunately, the Justice Department isn't the only federal agency in the mix, here. The merger will now go the FCC, and at least one powerful Democrat is pressuring regulators to nix the deal.

    "We are particularly disturbed by this decision, given the Justice Department's record in recent years of failing to oppose numerous mergers which reduced competition in key industries, resulting in the Justice Department not bringing a single contested merger case in nearly four years," said Sen. Herb Kohl, D-Wis., who chairs a subcommittee on antitrust. He added that the merger would create a satellite radio monopoly.

    Oh, the humanity! What might this huge, evil empire do? Force subscribers to listen to 150 channels of '70s soft rock?

    The Justice Department did the right thing on Monday. Now the FCC should follow suit.



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    John F wrote on March 25, 2008 09:07 AM: Rob and Daivd,

    Good points. When talking about creating new competition in monopololy markets the question is, what are the barriers to entry? How expensive is it to start a company and what price will you have to charge to support it? In the cas of satellite radio I imagine the barriers are not insurmountable.

    Certainly there isn't anything Sirius/XM can do to keep someone else from launching a satellite. This isn't a Microsoft kind of situation.


    Rob L wrote on March 25, 2008 08:16 AM: David,

    The answer you provided to your own question is wrong...

    What happened when cable became a monopoly? DirecTV, Dish and the phone companies got involved. End result? I am still paying the same $35/month I have been paying since the 80s.

    Same deal here except with 1 twist. Without the merger, both are gone and there is no satelite radio. If they merge and end up raising prices, a competitor with emerge to compete. Its called capitalism and history is filled with tales of monopolies that have been toppled. We heard the same cries about Blockbuster shutting down all the Mom and Pops, well Netfilx came and Blockbuster got beat down and the price of renting movies hasnt risen in years.

    To paraprhase you last comment, I always trust people who put their own money where their mouth is over someone like the CU in this case who has zero skin in the game. I generally respect the CU but in this situation, they are wrong.


    David Johann wrote on March 25, 2008 07:57 AM: Heres a question:

    What happened to cable television rates when each local market was essentially monopolized?

    Rates went up, up, up, and so did the earnings of Cox et al.

    But if the two Satellite networks will go belly up without merging, then the point is moot.

    Frankly, I always trust Consumer's Union before the RJ and wonder how much of the entire story the RJ has provided here.

    What is Consumer's Union's entire argument?


    Ken wrote on March 25, 2008 05:14 AM: So where was Senator Kohl during the 81 billion dollar Exxon-Mobile merger? A monopoly on oil is good for America I suppose.
    Here are two struggling radio companys, hugely in debt. I suppose someone thinks letting them crash and burn are more important to our economy than helping them save themselves.
    What monopoly is it that they are saving us from? I listen to FM radio in my wifes truck, then Sirius in my truck on my way to work and then iTunes radio on my computer at work.


    GEORGE wrote on March 25, 2008 04:06 AM: The proposal creates a monopoly. All monopolies have hidden costs to the public. The monopoly attracts investments that would otherwise be used in competitive businesses. The monopoly has no incentive to improve its services or lower its costs to the public. Its success encourages other businesses to seek monopoly status by manipulating politicians.