Well I read a piece this morning from the CNN Money editor and was agog at his conclusions, and then I read a few of the posts here and on the XM board and thought I would stoke the fire a bit. Become a Complete Fool
The CNN piece was titled "Sirius-XM deal is sweet music for consumers" and the opening salvo was "If Sirius Satellite Radio and XM Satellite Radio are allowed to go through with their plans to merge, there will only be one satellite radio network left in the U.S. But make no mistake: this would not constitute your classic monopoly."
The writer went on to tell of all the great and wonderful things that would come to consumers - they wouldn't have to choose for instance. As examples he offers the hypothetical of someone who wants to listen to both Howard Stern and Opie and Anthony. Heaven forefend, the only solution appears to be to subscribe to both! Likewise if you want the NFL and MLB. How could the poor listener be treated so cruelly?
Posters (and owners) hereabouts are agape that the NAB is against such a merger, and diss their disapproval of "poster boy Howard Stern" as reason to give the satellite guys a break. (OK, that's a cheap shot on their part, but give them credit for an opening salvo at least worth some ink.) Others skip right past the part of current legislation which forbids one satellite company from owning more than one license, while still others talk about "the competition" including cell phones, iPods, and, presumably desktop computers which can play music and that crusty old Victrola up in the attic.
Hogwash. The FTC and DoJ have, historically, narrowly defined "competition" - I recall one soda company trying to make the case that their competition included lemonade and water. A non-starter, that one. The iPod argument, too, in this case.
The "we can't make the business profitable unless we merge" is pretty much a loser, too, so far as I can tell. With Howard "poster boy" Stern walking away with $500 million or whatever it is (plus bonuses), and rich contracts being floated to the sports leagues, I'm not sure who is going to buy the poor-mouth argument. Not anyone with a passing acquaintance with Arabic numerals, I'll wager.
Speaking of the NFL and MLB, not to mention the NBA and my favorite new whipping boy, Howard, do you think they will like the idea of having only one satellite company, rather than two competing against each other to get "exclusive" content to lure subscribers? What incentive is there for SIRIXMBIGSATELLITECO to pay rich bucks to content providers, when there's nobody else in the auction room? That's how competition works: one guy has an idea, pays for it and sees if he can skunk the other guy. When there's no "other guy", it's not much of an auction. When Howard's deal is up, what's his leverage if there's nobody else in the room? Likewise the sports leagues. Likewise Rush, HGTV, or whoever else wants to fill the sky with their brand of programming.
I think I mentioned "competition" up there somewhere, didn't I? Can "no competition" really be good for consumers? Oh, sure, in the short run maybe, but how far and how fast do you think cell-phone rates, coverage, plans and promotions would have advanced if the only company out there was ATCELLVERIZONET and they offered their swell "one size fits you because it's the only plan we offer" plan? Don't think "tomorrow", think three years from now, five years from now.
Hey, isn't there a satellite thing in television? DirecTV and Dish? Didn't they try this and get shot down - by the partisans in an administration which is supposed to be friendly to all but the most outrageous monopolistic mergers? Aren't there other TV channels? Aren't there other TV networks? Is that what that was? Is that what this is? Or are we thinking that a temporary promise not to raise prices is all it will take, and in a couple years, when there is one SUPERSATLLITEXMSIRIRADIOCOMPANY in the sky, that some new kid can come along, lift his own satellite, convince the car guys to go with his system, and get, oh, 8 million receivers in consumers hands so that someday there is competition in this field? Not likely, methinks. As unlikely as starting a new satellite TV company and having it last more than a few months. Voom, we hardly knew ye.
I understand that such a merger might be good for investors in these two money-losing companies, but then that's not generally how these things get decided - nor should they. This deal should be evaluated not on whether it's good for Mel, or good for you, but whether it's good for competition in an arena in which it will be impossible to launch (pardon the pun) another entrant into the field once it coalesces around one big player. It won't be good for content providers, it won't be good for the future of the industry, and it shouldn't be approved.
Join the best community on the web! Becoming a full member of the Fool Community is easy, takes just a minute, and is very inexpensive.
Well I read a piece this morning from the CNN Money editor and was agog at his conclusions, and then I read a few of the posts here and on the XM board and thought I would stoke the fire a bit.
Become a Complete Fool