Newsroom: Cable & Satellite

For Immediate Release

Washington, D.C. -- The XM-Sirius merger would eliminate competition in the satellite radio market and harm consumers, the Consumer Federation of America, Consumers Union and Free Press charged in an FCC filing today. Based on a review of the record and new data on prices and competition, the filing renews its recommendation that the FCC reject the proposed merger.

"Thousands of pages of analysis have been filed, but they do not alter the basic fact that this merger would create a monopoly in satellite radio that would have a wide range of anticompetitive and anti-consumer effects," said Dr. Mark Cooper, Director of Research for the Consumer Federation of America and principle author of the report.

"We looked carefully at the proposal for temporary, regulated a la carte bundles and found them to be quite unattractive," Cooper added. "The proposal does not specify when the offer will start, when it will end or how much the new radios needed to receive both satellite radio broadcasts will cost and consumers would end up paying much more per channel with the bundles."

The filing points out that the proposal for price regulation fails to address the other anticompetitive effects of the merger. There are additional demand-side issues

• Pricing cannot be allowed to go unregulated at some time in the future.

• Quality aspects of the product offering must also be regulated including program choice, equipment design and price, and the amount of commercial time need to be addressed.

There are supply-side issues as well.

• Retailers and talent will come under the thumb of the monopoly and must be protected from abuse.

• Without competition to regulate market behavior, long-term issues of capacity and utilization of the frequencies may also arise.

"The filing also introduces new evidence showing that satellite radio and terrestrial radio do not compete," Cooper noted. "Publicly available evidence on usage and an econometric model based the FCC’s own data on radio stations indicates that satellite and terrestrial radio are not close substitutes. This directly contradicts the proprietary data introduced into the record by XM-Sirius."

"The anticompetitive and anti-consumer effects of the merger are obvious and the FCC would have to abandon the fundamental principles that have guided its competition policy for the past decade and the explicit prohibition on a merger in the licenses to approve this merger," Cooper concluded.

Click here to view the full filing.

Contact: Mark Cooper, CFA, 301-384-2204 or Jennifer Fuson, CU, 202-462-6262