WASHINGTON, DC - May 12 - The Consumer Federation of America, Consumers Union and Free Press are urging the Federal Communications Commission to reject the proposed XM-Sirius merger. The Department of Justice signed off on the deal without attaching any conditions to protect consumers.
In March, consumer groups criticized that decision as fundamentally flawed and called on the FCC to deny the transfer of the licenses to use the spectrum that XM and Sirius hold, which would effectively kill the merger.
"The Justice Department tossed all tenets of antitrust out the window in its rush to rubber stamp this merger-to-monopoly," said Mark Cooper, director of research for the Consumer Federation of America. "The FCC should not buy into the flawed reasoning that led to the DOJ's disastrous decision. Consumers are depending on the commission to stop this dangerous deal dead in its tracks."
The Justice Department based its merger approval on the conclusion that satellite radio is part of a larger audio market. However, consumer groups -- using the FCC's own data on radio stations -- have shown that satellite radio and terrestrial radio are not close substitutes. The groups argue that satellite radio represents a unique consumer product, showing that it does not compete with iTunes or Internet radio.
"Protecting consumers should be the FCC's first priority," said Chris Murray, senior counsel of Consumers Union. "Allowing one company to monopolize the satellite radio industry would leave consumers with higher prices and fewer choices but no real benefits. Rejecting this deal should be a no-brainer."
The consumer groups' filing points out that the DOJ analysis ignores many aspects of competition between XM and Sirius that promote the public interest. In its analysis, the DOJ concedes that XM and Sirius:
Did compete to sign automakers to long-term contracts and continue to do so when those contracts expire;
Do compete for a great deal of programming, music, niche news and talk;
Do compete for marquee programming;
Do compete in retail distribution; and
Would have competed more if they had kept their promise to deliver an interoperable radio.
As a consequence, permitting the two satellite radio companies to join would have many negative side-effects -- both for consumers and for the satellite radio industry. For consumers, the merger would reduce the number of channels and formats available and result in fewer cost-saving incentives. The loss of competition in the industry would also cause a dramatic drop in spending on talent.
"By approving this monopoly deal, the Justice Department has failed as the public's corporate watchdog," said S. Derek Turner, research director of Free Press. "Now it's up to the FCC to safeguard consumers and promote competition on our public airwaves."
Read the consumer groups' FCC filing.
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