Satellite Radio: Let Consumers Decide
NEW YORK -- The Justice Department gave its OK on Monday to a deal that would put Howard Stern and Oprah Winfrey under the same satellite radio company roof. The announcement boosted XM shares 15.5% to $13.79 and Sirius 8.6% to $3.15 (see chart above).
Now that the Justice Department has stepped aside, Sirius and XM only need to win approval from the Federal Communications Commission before they can close the deal that they struck in February 2007. Both companies are unprofitable and want to cut costs.
Still, opponents plan to push the FCC to stop the merger or at least put conditions on it. "This monopoly will lead to higher prices, less innovation and lousy service," says National Association of Broadcasters (NAB) Executive Vice President Dennis Wharton.
Comment: Satellite radio is less than 1% of the total radio market, according to NAB's website, so why should they care about high prices and lousy service in such a small segment of the market? It seems like that would serve to help terrestrial radio, not hurt it.
And if one company has 1% of any market, is that even a "monopoly?" Mercedes has about 1% of the U.S. vehicle market, and has a "monopoly" on the unique Mercedes features and design, is anybody worried about Mercedes?
When it comes to radio, or just about any other product, consumers can probably decide better than Justice, FCC or NAB what is best for them.