Senator Wants XM-Sirius Merger Blocked
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Senator Herb Kohl (D-WI) has asked the Federal Communications Commission to block the merger of XM and Sirius (see my previous merger coverage here, here, here, here, and here). Senator Kohl may have some sway with the decision because he is the Chairman of the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights and would have the oversight of this merger and others.
Senator Kohl immediately convened hearings on the merger, where Mel Karmazin attempted his song and dance that less competition actually meant more competition. In his letter, Senator Kohl was unconvinced that satellite radio should be compared to all forms of music distribution, including terrestrial radio and iPods. He was also not convinced that any of the emerging technologies, such as wirelessly distributed internet radio, would be online in the 2 year lookout period allowed under anti-trust law.
He also rejected calls for price caps and other regulations of the industry because he does not want the Federal government to be in the business of regulating the satellite radio industry intensively for years to come (don’t they already?).
The arguments that Senator Kohl makes will be tough to beat. He cites the Clayton Act, which strictly forbids combinations that substantially lower competition or create monopolies. Because the merger of the two companies would create a monopoly in satellite radio, the entire argument for XM-Sirius is that satellite radio should be put into the larger world of radio and iPods. Senator Kohl, a Democrat, isn’t buying it which does not bode well at the 5 person FCC. The FCC appears to be split on the issue and a little nudging from Congress could be all that they need to deny the deal.
This letter hasn’t gotten a whole lot of press, but it could be the first nail in the coffin of this deal.