Thursday, March 08, 2007

XM and Sirius Radio: Let the Market Decide

George Mason economist Russ Robberts has an excellent post today on Cafe Hayek about the proposed merger between XM and Sirius satellite radio stations, and the possible, but unwarranted resistance from the FCC to the merger. Here is an excerpt:

"I have no idea if there's room for two satellite radio companies or whether there's room for 50. What I do know is that there is no meaning to the idea of satellite radio market share. After this merger, the new company will have a complete and total monopoly of the satellite radio market. But that is meaningless. Satellite radio has to compete with my regular radio, internet radio, my CD collection and my iPod. Oh, and my TV and talking on my cell phone with friends and a thousand other ways to pass the time.

Five years ago there was no satellite radio. When one company came along, should the FCC have shut them down for daring to monopolize the market? So why is it now that there's two going back to one we have a potential calamity that the government has to worry about?"

Bottom Line: Existing market competition, both direct and indirect, and the potential threat of new competition, is by far the best regulator, and will do more to discipline a merged XM and Sirius than anything the FCC can do.


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