FCC Should Approve the XM-Sirius Satellite Radio Merger

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Richard Morrison, 202.331.2273

Washington, D.C., April 17, 2007—Today, as the Senate Commerce Committee considers the proposed merger of XM and Sirius Satellite Radio, the Competitive Enterprise Institute urges federal regulators to approve the union of the two companies and proceed with steps to modernize antitrust rules for all industries.

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.”

The Competitive Enterprise Institute has long encouraged policy makers to reform antitrust law and its enforcement in the interest of fostering increased competition and innovation. CEI has assembled an “Antitrust Skeptic’s Bibliography,” and filed comments with the Antitrust Modernization Commission, which sent its recommendations to the President earlier this month.

CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government.