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Senator Urges Martin To Reject XM-Sirius Merger
WASHINGTON -- April 10, 2008: Sen. Sam Brownback (R-KS) has written to FCC Chairman Kevin Martin urging Martin to correct "the Justice Department's mistake of approving the merger of XM Satellite Radio and Sirius Satellite Radio" by rejecting the proposed alliance.
"The FCC should be mindful that the Justice Department's conclusion lays a dangerous trap for the FCC," Brownback continues, saying that Justice ignored FCC rules blocking XM and Sirius from merging and requiring them to build interoperable receivers. Instead, he says, the department "rewarded XM and Sirius for their audacious refual to comply with an FCC requirement to manufacture consumer-friendly interoperable radios."
The FCC must reject the merger, Brownback writes, or "risk allowing the violation of one pro-competitive rule to form the basis for eliminating another pro-competitive rule."
Additionally, Brownback is concerned that Justice Department is "bending the rules for two companies that have based their business models on peddling obscene and indecent content." He writes to Martin, "I know you share my concerns over the coarsening of the airwaves, and I strongly believe that creating an exception to the FCC's previously stated policy of disallowing such a merger will only aggravate the problem."
Brownback concludes, "I challenge the FCC to stand up where the Justice Department has laid down, and demonstrate the backbone to enforce your rules where the Justice Department has shown none."
In other news, Wisconsin Attorney General J.B. Van Hollen has asked Martin in a letter to "take action to block the proposed license transfer of XM and and Sirius satellite radio companies, which would be bad for consumers and bad for competition."
The merger, Van Hollen writes, would eliminate competition in satellite radio and allow the combined company to raise prices and reduce program diversity. He continues, "Indeed, the proposed merger has already caused the parties to issue a post-merger subscription plan that will vary the price of subscription by type of service, and may result in consumers paying more for what they could purchase now as a package of services for less."
He continues, "Here, there is not an unregulated free market such that another firm could easily enter and compete against XM-Sirius." The "high barriers to entry," Van Hollen writes, include the need for FCC approval, large investments of capital, and technical needs including satellite launches.
Van Hollen contends that broadcast radio is not an effective substitute for national satellite service and points out, "About 1.2 million Wisconsinites live in areas that receive fewer than 15 broadcast radio channels. Rural areas in Wisconsin are the most severely affected, some receiving less than five radio stations. For people living in and driving through these areas, this license transfer would represent a significant reduction in the number of channels available to meet their needs and will adversely impact the public interest."
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