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Dorgan Urges FCC To Reject XM-Sirius Merger
WASHINGTON -- April 18, 2008: In a letter to FCC Chairman Kevin Martin, Sen. Byron Dorgan (D-ND) says the Department of Justice's approval of the merger of XM Satellite Radio and Sirius Satellite Radio showed "disregard for the public interest and unwillingness to enforce antitrust law," and urges Martin not to "follow the illogical court of the DOJ."
Dorgan acknowledges that it woudl be unusual for the FCC to deny a merger the DOJ has approved, but says Justice overlooked key aspects of the deal when it gave its approval.
"The Department of Justice did not believe that the merger would allow for an increase in prices," Dorgan writes. "Yet when the satellite companies no longer compete with one another, there will be no direct competition with the ability to regulate the cost of the satellite radio service. The iPod will not affect the price of satellite subscriptions. Terrestrial broadcast radio will not affect these prices." He notes that broadcast TV has not kept cable TV prices from going ever higher.
Dorgan also believes that the "diversity and quality of content will deteriorate" if XM and Sirius are allowed to merge. He continues, "Satellite service offers a great deal more than terrestrial broadcast radio. Condolidation in that sector by companies like Clear Channel has managed to homogenize and decay free over-the-air radio. The same could happen to satellite service when they are no longer forced to compete with one another."
The DOJ cited the lack of interoperable receivers in justifying its conclusion that XM and Sirius don't compete for one another's customers, and Dorgan says that decision ignored the FCC requirement that the services develop interoperable receivers -- which XM and Sirius have failed to do. Dorgan writes, "For defying this FCC order and for engaging in this anticompetitive practice of locking in car buyers to one of the two satellite companies, the Department of Justice rewards them with a merger."
Dorgan also doesn't buy that XM and Sirius can't survive without a merger, noting that the merger wasn't proposed as a way to save failing firms. And, he says, "Even if the companies were failing, they should not be rewarded with a government-granted monopoly."
Dorgan concludes, "I hope that the FCC will stand up for competition in the public interest and deny this merger."
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