7.25.2008

The XM-Sirius Merger: A Corporate Media Triumph

by Rick Rockwell

Bribery will get you everywhere, it appears.

Certainly, the seemingly inevitable merger of XM and Sirius, the satellite radio firms won’t be viewed as the result of bribery. But the lobbying that got us to this place, inches away from final FCC approval, and the final compromise plan to secure the last Republican swing vote certainly has the taint of a monopoly created behind the force of millions of dollars. Sort out the details, and the merger technically isn’t due to bribery, but call the messy resolution sordid, nevertheless.

As this is published, the final vote by the Federal Communications Commission (FCC) still hangs undecided. But The Washington Post is running with a sourced story that Republican Deborah Taylor Tate will cast the swing vote, perhaps as early as today (July 25), to bless the merger.


Predictably, that would put all the Republicans on the commission in favor of creating a satellite radio monopoly. That puts them in line with the politicized Justice Department, that is also putting corporations and big money first and saw no problem with the merger violating antitrust law. (As others have noted, if this merger passes antitrust muster why not merge Coke and Pepsi too? The same arguments could be made to qualify such a merger, and actually the XM-Sirius merger now provides precedent.)

Also, predictably, both Democrats on the commission stood with consumer groups, like Consumers Union, to oppose the merger.

As noted in this blog many times before, the merger is a government sanction for bad management, a bailout if you will. Both XM and Sirius spent hundreds of millions, needlessly really, on bidding for big name talent. The talent (if you call Howard Stern and Oprah Winfrey talent) could not deliver the big subscriber numbers needed to make the services profitable. As it turns out, most folks aren’t interested in paying for Stern or Winfrey, but prefer to get them on commercial (so-called “free”) media instead. So the companies sought a merger as a way to fight their growing debt.

Now, the only way to stop the merger is if consumer groups find the financing and guts to go to court. The courts have not been kind to the FCC in recent years, overturning a variety of major commission rulings; that includes the recent court decision to block FCC fines in the infamous Janet Jackson breast baring incident at the Super Bowl. A court case is the only way to stop this merger insanity, at least until a revamped Justice Department in the Obama administration can make everyone come to their senses. (Given Sen. John McCain’s views on cable television, a McCain White House may have other thoughts too.)

Apparently, Commissioner Tate seems to be bending toward the merger if both companies agree to pay the federal government $20 million in fines.

So, let’s get this straight. The companies agree they have not kept promises to consumers about the availability of consumer-friendly receivers. The companies agree they have broken FCC regulations in regards to their ground-based repeater transmitters. So these fines are due to the government regardless of any merger proposal. But Tate is willing to exchange her vote of approval if the companies agree not to fight and just pony up the cash. Sounds like typical Republican shady dealing while selling out consumers.

As part of the FCC deal to approve the merger, Republican commissioners have fashioned a long list of items that the merged satellite monopoly must do — including price cuts — to appear to be serving the public. (After all, the core mission of the FCC is to get media firms to uphold the public interest.) But if the FCC is too weak to even fight the satellite radio firms over fines that the federal government has coming, how much enforcement is going into making sure a future monopoly is upholding the letter of this merger agreement?

This merger is about to prove that big money, expensive attorneys, and well-placed lobbyists win almost every time. And really, in the end, that makes bribery look bush league.

For more background, please also see:

(Graphic collage by koka_sexton of the San Francisco Bay area of California via Flickr, using a Creative Commons License.)










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