Both Sides Look Bad as XM-Sirius Debate Continues, MAP Says

“This transaction has brought out the worst in the merging parties and in the opposing parties,” Schwartzman said. “Organizations that have a direct stake on behalf of their membership in the outcome… have something important to tell the Commission.” But, he said, many of the groups that filed have no record in communications policy and no expertise. “The FCC is going to have to start distinguishing between phony front group organizations and genuine citizen input,” he said. “This docket is an important warning that unless the FCC starts figuring out how to distinguish between the two… we're going to complicate public policy decisionmaking a great deal.”

“This is a very weird merger,” said David Solomon, representing NAB, its main opponent. “Basically, the FCC would have to disregard well established rules, policies and standards in a number of areas before it could grant the merger.”

Commission spectrum policy, which recognizes that no one company should get all the spectrum for a service, as well as the rules that launched satellite radio, weigh against approving the merger, Solomon said. “From our perspective, what’s going is that XM and Sirius recognize that if the commission applied the traditional standards that it uses that would basically kill the merger,” he said. “So, instead, they want to kill the standards.”

Solomon questioned XM-Sirius arguments that satellite radio and broadcast radio are part of a single audio market, as federal regulators weigh possible market power issues. “If they were roughly the same thing, then basically what XM and Sirius are saying is that you've got 14 million raving idiots who have decided to subscribe to XM and Sirius, even though they could get essentially the same thing for free,” he said.

Gigi Sohn, president of Public Knowledge, argued that the merger should be approved with conditions, including a rate freeze, a la carte provisions like those XM and Sirius have already proposed, and a set-aside for programing not controlled by the companies. “Under the right conditions the merger would be in the public interest,” Sohn said.

“These are two companies that have had consistent losses,” Sohn said. “Will they survive on their own? Probably. Neither has said if this doesn’t go through that company will die. However, do you want two weak companies trying to compete against broadcasters or do you want one strong company? They're bleeding money. The fact that they're bleeding less money than before to me is not persuasive.”

Randy May, president of the Free State Foundation and a merger supporter, said discussion of merger points to the need for the FCC to move past traditional regulatory “stove pipes.” “What we're talking about here is a market that is broader than just one defined by the technologies and the fact that there are satellites in the sky,” he said. May noted that in evaluating the video marketplace the FCC looks at broadcast TV, cable, satellite and programs streamed on the Internet. It should take a similar view of the audio market, he said.

In other merger developments, Rep. Rick Boucher, D-Va., wrote an editorial for Roll Call supporting merger approval. Boucher said on first examination the merger raises antitrust concerns, but the market is “more subtle and more compelling” than initially meets the eye. “That market is the entire marketplace for audio entertainment, including terrestrial radio, Internet radio and Internet-protocol-enabled applications, such as iPods,” he said. NAB said Georgetown Partners, a minority-owned communications investment and management company, filed comments at the FCC opposing the merger.