FCC tunes in on Sirius-XM merger debate

By Brooks Boliek

WASHINGTON (Hollywood Reporter) - 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 on 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 expired.

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.