Monday, February 19, 2007

NAB Against Merger - No Surprise

February 19, 2007

The response by the NAB comes as no surprise. For the past year - ever since they saw an impending threat from satellite radio - the NAB has taken many steps to work against consumers getting the superior content that is offered by satellite radio.

Dennis Wharton of the NAB stated:

"Given the government's history of opposing monopolies in all forms, NAB would be shocked if federal regulators permitted a merger of XM and Sirius. It bears mentioning that regulators summarily rejected a similar monopoly merger of the nation's only two satellite television companies -- DirecTV and DISH Network -- just a few years back."

While Wharton is correct that the government opposes monopolies, he fails to consider the environment that exists in the modern marketplace. Indeed, the NAB does see satellite radio as competition, as well as I-Pods, internet radio, and many other services offering audio content. Thus, would a merger of Sirius and XM present a monopoly? It appears that in this instance the NAB is looking at a very narrow definition of the marketplace. Would this be a case of selective definitions to suit a specific debate? How do NAB members argue about repeaters, traffic programming, weather programming, etc. in one instance because of competitive threats, but then go on to argue that a merger would create a monopoly?

Wharton goes on to state:

"When the FCC authorized satellite radio, it specifically found that the public would be served best by two competitive nationwide systems. Now, with their stock prices at rock bottom and their business model in disarray because of profligate spending practices, they seek a government bail-out to avoid competing in the marketplace."

What Wharton misses here is that the public interest could very well be better served by a satellite radio merger. Imagine a tiered system that lets consumers identify and buy the content they want at a financial level they are comfortable with. Further his statement about stock prices, spending and business models seem very contrite. yes, satellite radio has spent a lot of dollars on content. They have a business model that deals with subscription services rather than relying on 20 minutes worth of advertising every hour. Was it not the NAB that scoffed at the satellite radio concept only 3 years ago? How is it that now the NAB suddenly sees satellite radio as a threat. The fact is that satellite radio has a business model that works, but does rely on a certain amount of subscriptions to sustain itself. That subscriber level is fast approaching. Mr. Wharton calls this a "request for a government bail-out." The fact of the matter is that this is not a bail out, and the business model is not in disarray. Both Sirius and XM announced narrower losses in Q3. Sirius announced CFBE for Q4. XM announced Operating Cash Flow positive in Q4. Analysts are projecting narrower losses going forward, and this business model is now in the beginning stages of coming to fruition. The merger simply accelerates that process, and that is what the NAB seems to fear. What is happening here is the NAB telling the nation that they fear satellite radio, and they are scared to adapt their business model to a modern world. The NAB has had a stagnant business model for decades, and for whatever reason, they would rather someone else's progress than adapt to the changes.

Mr. Wharton, your argument here is littered with your own agenda. You are not trying to think in the best interest of the consumer, and your veiled attempt to portray yourself in that manner speaks loud and clear about what you think of the American population. Your stance against the merger is solely tied to your own business. If your true concern rested with the consumer we would not be seeing massive payola investigations against many in your membership. Perhaps your efforts should focus on your own methods prior to worrying about other things.

This statement by Mr. Wharton is very telling:

"In coming weeks, policymakers will have to weigh whether an industry that makes Howard Stern its poster child should be rewarded with a monopoly platform for offensive programming. We’re hopeful that this anti-consumer proposal will be rejected."

Mr. Wharton......with all due respect......You are now making an ass out of yourself. Howard stern spent over 20 years on terrestrial radio airwaves for your members!!!! Further, Howard stern is but one piece of content. Additionally, he makes up less than 1% of the channels available on Sirius. Your broad characterization of "offensive" is relative. There are many who consider the advertising on your airwaves offensive. Liberals consider conservative programming offensive, Conservatives feel the same about liberal programming. the Fact of the matter is that satellite radio offers more programming of various slants in ANY MARKET than the members of the NAB could ever hope to accomplish. Additionally, your characterization of a merger as anti-consumer is at this point unfounded. Did the NAB fight hard against Clear Channel taking control of massive share in markets? Was that anti-consumer? Do you not recognize that the merger could be even more consumer friendly than the situation that exists today? Are people so programmed for disappointment that they now automatically assign the most negative thoughts to anything new and different? Is it beyond your ability to consider that consumers could benefit?

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2/19/2007 08:30:00 PM

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