Sunday, July 27, 2008

16 Months Later

Free Terrestrial Radio - A free service that allows you to listen to music, sports, and talk shows with the help of an electronic device that tunes in to a band of frequencies that correspond to different choices. Signal source emanates from local sources and is broadcast over the air using public airwaves.

Portable Music Device - An electronic device that allows someone to add their choice of songs, videos, and movies for portable use either in the house, in the car, or wherever else the user wishes to listen.

Satellite Radio - A pay service that allows you to listen to music, sports, and talk shows with
the help of an electronic device that tunes in to a band of frequencies
that correspond to different choices. Signal source emanates from a east coast location and is broadcast to subscribers nationwide via a satellite in geosynchronous orbit.

Call me cynical but the 3 above choices as well as others not mentioned sound like competition for my entertainment options. But for the past 16 months various lobbying groups, the National Association of Broadcasters (NAB) in particular, and government agencies that the groups lobby have tried to tell us that the merging of the only 2 companies operating satellite radio business would result in an illegal monopoly.

While monopolies are often not illegal unless they meet certain conditions (just ask the cable TV and telephone industries up until recently), I have a hard time seeing the case that the merging of XM and Sirius would in fact constitute one. And finally earlier this year the Justice Department agreed when they approved without conditions the legality of the merger by concluding that there were enough other choices available to dispel the monopoly contention.

So why did it take 16 months for us to get the the final 3-2 vote by the FCC on Friday that approved the merger? CNBC's Jim Kramer gives us his insight taken from an interview earlier this year:
this merger has had more oversight than the Iraq war, that the members of Congress are in the hip pockets of terrestrial radio, that the DOJ has rubber stamped merger after merger, and that the fact that this merger has taken so long is a travesty and an injustice.

And there is the rub, what part did the NAB and the rest of the free radio broadcasting industry play in delaying and almost defeating this proposed merger through their lobbying efforts?

Well besides having members in Congress, whom happen to be receiving thousands of in contributions from the NAB, speak out against the merger, they delayed the process at every turn with petitions and requests that led directly to one of the longer merger negotiations in US history. Seems like a lot of effort to me from a group that contends that it isn't a competitor with satellite radio doesn't it? Add to all that the conditions that other lobbying groups requested in order for them to support the merger and you see a pattern forming.

The NAB and the free radio industry, not having any serious competition for most of their history, finally had competition (despite their monopoly contentions) and they called out their big guns to oppose it. Both XM and Sirius have been bleeding money for most of their history and without this merger, one if not both of these companies might have failed. The NAB knew this and if they couldn't block the merger, they hoped that by delaying the merger, one if not both companies would have failed.

That didn't happen and now, despite the best efforts from the NAB and democrats from the FCC including South Dakota's Jonathan Adelstein, the merger is going through. So what does that mean?

For most of the 18 million or so subscribers, not much will change at least initially, and even with the combining of the 2 companies financial stability is still a ways away if it ever happens but soon there will be some welcome changes. Some of those include the best music programming from both services, both MLB and NFL games, Opie and Anthony, Howard Stern and ala-carte pricing options.

They say good things come to those who wait but hopefully we haven't been forced to wait too long by shady dealings from lobbying groups whose only concern is preserving their bottom lines at our expense.

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