When the FCC authorized two satellite radio operators in 1997, it specifically prohibited the nationwide systems from merging.
Nothing has occurred in the 10 years since to warrant a change in this public policy. XM and Sirius are unique in their ability to provide portable radio service on a nationwide scale to geographically dispersed audiences. Local radio stations do not have a nationwide reach, and iPods only allow users to play music from their own collections. There is no competitor to XM and Sirius in the satellite radio market.
The bad business decisions of these companies do not necessitate a government bailout by allowing a monopolistic merger.
Both XM and Sirius took on tremendous debt to launch their satellites, spent vast sums on programming and incurred excessive marketing costs. Is it any wonder companies who pay talent up to $100 million per year are not turning a profit? Consumers will be the ones left holding the bag if the two companies are allowed to merge into a monopoly with no competition.
XM and Sirius have shown a blatant disregard for FCC rules.
As a condition of their original license, the satellite radio operators were required to deliver designs for interoperable radios. As of today, no radio that is interoperable between both systems has ever been made commercially available. Also, the companies put devices into the marketplace that violated the FCCs equipment power limitations, causing numerous consumers to experience interference on their car radios. Despite numerous requests, these devices have never been pulled from the marketplace.
A merger between the only two satellite radio companies is a guaranteed headache for consumers.
There are sure to be hidden costs and confusion as XM and Sirius attempt to merge two business philosophies and two different technologies which have never been interoperable. According to the engineering firm of Meintel, Sgrignoli & Wallace (MSW), a merger between XM and Sirius would not allow existing satellite radio customers to have access to more programs than they have now without buying a new satellite radio. Also, the two satellite systems cannot be expanded to fit in more channels beyond their current level without incurring loss of audio quality so much for better programming choices.
Local broadcasters do not compete with XM and Sirius in a national market.
A local radio station which delivers local news, weather and entertainment - can only broadcast within its FCC-defined market. Satellite radios channels which are pre-packaged bundles of programming - are heard nationwide. This allows satellite radio to compete with local radio, but prevents local radio from competing with satellite due to its lack of nationwide reach. No educated consumer would consider these two models comparable.
Not long ago a similar merger between satellite television companies DirecTV and EchoStar was rejected by the FCC because of anti-competitive concerns.
That merger was probably less problematic than XM and Sirius, as the relevant market included cable as a competitor. XM and Sirius have no other satellite radio competitors.
