Friday, March 02, 2007

Ashcroft is Anti-Merger

March 2, 2007

AP reports that Ashcroft is Anti Merger:

Ashcroft Attacks Sirius-XM DealFriday March 2, 5:53 pm ET
Lobbyist Ashcroft Condemns Sirius' Proposed Acquisition of XM in Letter to Successor Gonzalez
WASHINGTON (AP) -- Former Attorney General John Ashcroft, hired by opponents of the deal, has blasted Sirius Satellite Radio Inc.'s proposed acquisition of XM Satellite Radio Holdings Inc., saying the combination would leave only one provider in the market.

Ashcroft, who served as head of the Justice Department for four years until January 2005, was hired by the National Association of Broadcasters to examine the acquisition.

The NAB, which represents traditional radio broadcasters, has been a fierce critic of the acquisition, now worth about $4.4 billion, since it was announced last week.

In a letter sent on February 27 to his replacement as attorney general, Alberto Gonzales, Ashcroft concludes "... the proposed Sirius/XM merger, which reduces the number of
competitors from two to one, raises most serious competition concerns."

Ashcroft compared the deal to the attempted takeover by satellite provider Echostar Communications Corp. of Hughes Electronic Corp., which would have reduced the competitors in the satellite television market in many areas from three to two.

"The Department recognized that reducing competition from three to two was anticompetitive and opposed the transaction, which was eventually abandoned," he said.

He also draws comparisons with the attempted tie-up between Echostar and DirectTV Group Inc., in which the FCC reaffirmed its rule of not granting a single commercial license for satellite TV. That deal also wasn't allowed.

"I would submit that a thorough study of consumer demands and preferences would show that terrestrial radio stations should not be considered part of the satellite radio market for the purposes of the review of the current merger ...," said the letter.

The companies' main argument for the deal being approved is that, while they are the only two satellite radio companies, they are in fact competing against the range of audio media including traditional radio, terrestrial digital radio, Internet-based radio and gadgets like Apple Inc.'s iPod.

The letter was forwarded by the NAB to lawmakers on the House and Senate Judiciary Committees.

While neither panel has authority to block the deal, the House Judiciary Committee's newly formed Antitrust Task Force has already held a hearing into the matter.

Next week it is the turn of the House Commerce Committee's telecommunications subcommittee, headed by Massachusetts Democratic Rep. Edward Markey.

The merger must receive approval of both the Department of Justice's antitrust unit and the Federal Communications Commission. The latter would have to change its rules to allow one company to hold the only satellite radio license.

Representatives of Sirius and XM were not immediately available to comment.

One has to wonder how Ashcroft feels about terrestrial radio ownership rules and the consolidation that the NAB is fighting for there........oh yea, Ashcroft is on the NAB payroll.....He feels exactly the way Mr. Rehr tells him to feel.

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3/02/2007 08:55:00 PM

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