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Wisconsin Seeks To Block Satellite Radio Merger

The deal would stifle innovation, raise prices, state argues

September 19, 2007 

“The proposed merger would eliminate competition in the satellite radio industry and the combined XM-Sirius companies would be free to raise prices, stifle innovation, and reduce program diversity,” Wisconsin Attorney General J.B. Van Hollen warned.

Van Hollen has written to United States Assistant Attorney General for Antitrust Thomas O. Barnett asking that the United States Department of Justice block the proposed merger between XM Satellite Radio Holdings Inc. and Sirius Satellite Radio.

Barnett heads the United States Department of Justice’s Antitrust Division, which has the authority to challenge acquisitions and mergers.

Van Hollen says the proposed merger is anti-competitive and anti-consumer and its impacts will be felt in Wisconsin, particularly in rural communities, where he predicts a significant reduction in the availability of sports and other programming.

Van Hollen urged that the Justice Department to block the merger, saying it presents a real threat to competition and is a clear violation of the Clayton Act’s prohibition on merger-to-monopoly.

The proposed merger got a boost earlier this month when former Federal Communications Commission chairman Mark Fowler said the deal would enhance competition. His comments came in a column in the New York Sun, whose parent company, Hearst Corporation, owns a stake in XM.

"In spite of the fact that satellite radio constitutes only 3.4 percent of radio listening today, traditional over-the-air radio operators have understood the potential threat and have had no choice but to compete, and have been dragged, albeit kicking and screaming, into the digital age," Fowler wrote.

The main argument that may prevent the current commissioners from allowing the merger is that it would create what critics say would be a monopoly. The National Association of Broadcasters (NAB), an industry group that lobbies on behalf of terrestrial radio broadcasters, has been by far the most vehement opponent.

"The national satellite radio market currently is a two-company duopoly trying to become a government-sanctioned monopoly," NAB president and chief executive officer David Rehr said at a House hearing in March. "The fact is, this monopoly would reduce innovation for services and equipment for consumers since there will be no competition in their defined market."

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