In Antitrust They Trust

Satellite radio pioneers XM and Sirius are finally going down the long-expected merger path, but not without a fight from the usual suspects. Mel Karmazin and others testified this week before the Senate Commerce Committee, where some members expressed skepticism about the supposedly Goliath-like corporate giant that would result.

Our take is here, summarized below:

While some critics have charged that a merged XM/Sirius would “dominate” the market for satellite radio, they ignore the fact that both companies are actually relatively small players in a much larger market of news and entertainment that includes broadcast networks, commercial radio, cable television, the Internet and more. The approximately $13 billion in market capitalization of both companies pales in comparison to the $57 billion value of one major cable company alone.

In addition, many of the loudest complaints about the proposed merger have been coming from the companies with which the new entity would likely be competing. Given the intense battle going on between XM and Sirius, not allowing them to merge would most likely result in either one or both continuing to lose money and being absorbed by their rival entertainment companies — a good deal for their competitors, but not necessarily for their customers or investors.

“Regulators should refrain from using the merger review process to extract a parade of concessions from these struggling companies,” said Competitive Enterprise Institute Vice President and Director of Technology Studies Wayne Crews. “Meanwhile, antitrust policy should allow aggressive competitive responses to the combination. Wall Street, investors, programmers, consumers, already-poised rivals, and new entrants collectively will discipline more thoroughly than could the Federal Communications Commission. That’s as it should be.”

You can also find an CEI’s “Antitrust Skeptic’s Bibliography,” and the comments we filed with the Antitrust Modernization Commission in 2004, which, by the way, just sent its recommendations to the President earlier this month. High tech policy – moving at the speed of government.