McDowell Again Ties XM-Sirius to Media Ownership

Comr. McDowell hasn’t decided whether the FCC should approve the XM-Sirius merger, he said at a news conference Wed. “Excellent question,"” he said, when asked whether the satellite operators compete with everything in the audio market or only with each another. “That'’s really the heart of the matter,” he said: “I haven'’t reached any conclusions on it.” The question also must be asked in the FCC media ownership proceeding, he said. “If XM is a competitor to local, free over-the-air broadcasting for purposes of relaxing media ownership rules, how at the same time can it not be a competitor” in the context of the merger? he said.

The $11 billion-plus merger proposal has spurred creation of competing blogs. Scott Cleland, president of consulting firm Precursor, criticized the deal in an essay titled “The Emperor has no Clothes” at precursorblog.com. Cleland told us he doesn’t speak for NAB or other merger foes. “I have no dog in this fight,” he said, tracing his exasperation to a recent Washington Post article, which he said displayed symptoms of “the Washington disease… Everything is about spin and negotiation. My blog is saying that there are laws and facts.” He doesn’t plan to file comments with the FCC or DoJ, he said. Cleland rejects XM’s and Sirius’s argument about a changed market, he said: “Every corporation that doesn’t like antitrust laws says that the only constant is change.” On the other side, a blogger blasted warnings of an XM-Sirius monopoly that the Carmel Group issued in an NAB-sponsored report (CD April 4 p10). At satellite radio blog orbitcast.com, a writer said that in Oct. 2005 Carmel’s Jimmy Schaeffler wrote that satellite radio competed with terrestrial radio, MP3 players and Internet radio. “This article was written (free from any funding from the NAB) only a year and a half ago,” the Orbitcast blogger wrote: “But yet an NAB commissioned report by the same group suddenly claims that any such [competition] is ‘ludicrous.'”

While NAB has been publishing antimerger studies from various experts (CD March 28 p10), Sirius’s representatives circulated an analyst note with a more favorable outlook. “We believe a merger is in the public interest because it would increase competition between terrestrial and satellite radio,” wrote Kit Spring for Stifel Nicolaus. The firm puts the possibility of merger approval at 55-60%, whereas Spring says the rest of Wall Street gives it only a 25% chance of being granted. Spring also predicts DoJ will “unexpectedly” approve the merger in late summer.