From the Corner Office

Hello Everyone,

I recently went to Washington to voice Greater Media’s concern over the proposed XM/Sirius merger.  While there, I met with Commissioner Jonathan Adelstein, Congressman Ed Markey, and the media legal advisors for Chairman Martin and Commissioners Copps and Tate.  Below are some of the thoughts I shared with them (and thank you to Sally Buckman, our FCC counsel, for her substantial input).

I firmly believe the FCC should enforce its long-standing and well-reasoned prohibition against a satellite radio monopoly, which it established in 1997 when it granted the spectrum licenses to XM and Sirius.  The policy underlying this prohibition — to provide an opportunity for a competitive satellite service to benefit consumers — is every bit as valid today as it was back in 1997.

Satellite radio is still relatively new and so far, there is no evidence that the competitive landscape has changed in such a way that a satellite monopoly is somehow justified.  There is no question that having two satellite radio providers has kept subscription rates competitive (it is not surprising that their rates are virtually identical) and encouraged each operator to provide diverse program offerings.

Permitting XM and Sirius to merge would completely undermine the FCC’s laudable regulatory objectives.  Think about it:  one company would control 25 MHz of spectrum.  This is more than the entire AM and FM terrestrial radio bands combined.  In addition, one licensee would be able to air over 300 channels in every market — 40 times more channels than terrestrial radio broadcasters are permitted to control in the largest markets. 

With 300 channels, there is absolutely no reason the monopoly company could not or would not use some of its channels to provide local programming aimed at specific large markets, competing directly with terrestrial radio but not on a level playing field.  Last year when Greater Media purchased a sixth FM station in Boston, we had to sell a station we already owned to be sure we complied with the FCC’s ownership limitations.  The inconsistency is mind-boggling.

The Department of Justice’s conclusion about the “market” in which XM and Sirius compete directly contradicts the FCC’s recent decision when it decided not to relax its broadcast local ownership caps.  DOJ concluded that XM and Sirius compete for listeners with traditional AM/FM radio, HD radio, iPods and cell phones.  The FCC, on the other hand, found that these alternatives were not good substitutes for listening to radio.  If DOJ is right that there is broad competition for listeners, then the FCC should relax the multiple ownership rules and permit companies to own more than a handful of stations in any given market.  If the FCC is correct, then the merger must be denied since it would indisputably create a monopoly in the satellite radio market.

In any event, if the FCC somehow permits XM and Sirius to merge, it should ensure that satellite subscribers are not discouraged from sampling other audio services, including HD radio.  The radio industry is at a critical juncture right now with respect to the implementation of HD radio.  We have spent millions of dollars to convert to digital.  Consumer awareness is growing, but the number of HD receivers in use is still low. 

To support broadcasters’ efforts to convert to HD and help provide a relatively level playing field, if the FCC permits XM and Sirius to merge, it should require the new company to subsidize or license receiving equipment only if it includes HD tuners and allows users to switch easily between the satellite and AM/FM Bands.  As you know, XM and Sirius failed to comply with the equipment interoperability requirement the FCC imposed in 1997 and, in fact, the DOJ ironically relied on this lack of compliance to support its conclusion that XM and Sirius do not currently compete with each other.  Therefore, failure to comply with the HD compatibility requirement should result in the forfeiture of some of the merged satellite company’s spectrum.  These companies have a long history of ignoring the dictates of the FCC.

It is imperative that we all let our voices be heard in Washington on the proposed XM-Sirius merger – before it is too late.  I highly encourage all of you to contact your local representatives (members of the House Committee on Energy and Commerce are listed below) and  the FCC Commissioners to let them know your thoughts on this very consequential proposed merger.

Please feel free to e-mail me by clicking on the "Ask Peter" icon posted below. I would love to hear your feedback or answer any questions you may have.