Monday, February 26, 2007

Competition

February 26, 2007

The merger was announced on Presidents Day, and Sirius and XM have already met with the five members of the commission at the FCC. XM had their Q4 conference call today, and Sirius will announce tomorrow. Wednesday Mel Karmazin will be speaking to congress in relation to the merger, and application to the DOJ should happen at some point next week. Application to the FCC will follow shortly there after.

The key element in the merger debate will center around the definition of the marketplace, and whether this merger would upset a balance for consumers. On the face of it some may be inclined to think that this merger would create a monopoly. This stance is only true if you look at a very narrow definition of the market, and feel that terrestrial radio, I-Pods, MP3 players, Internet radio, streaming content over cell phones, etc. are not in the business of providing audio and/or video content to consumers.

The fact of the matter is that satellite radio has many competitors. There are aspects of this that satellite radio has advantages with, but there are also aspects where satellite radio is at a disadvantage.

Do AM and FM radio subsidize radio installations in cars? Do they have a fee associated with their service? They have a lock on local content, but also are subject to censorship. Consumers can listen for free, but drive to far, and you lose your signal. There are distinct advantages as well as distinct disadvantages in that segment of the media entertainment sector.

Similar arguments and stances can be stated for I-Pods, MP3's, intent radio, and streaming cell phones.

It boils down to the acceptance that all of these technologies are indeed competing for the ears of the consumer, and this fact is indisputable.

Most analysts believe that the competition requirements of this proposed merger can be easily argued, proven, and won. I have yet to hear a compelling argument that all of these other content providers are not in competition with satellite radio.

On face value, and given what is already known regarding the availability of content and choices, most would be hard pressed to carry an opinion that the DOJ will nix the deal. Time will tell, and there will be a lot of discussion on the subject. Boils it down to the simplest terms, and you can arrive at but one conclusion.

Labels: competition, merger, sirius, xm