So it looks like controversial former Attorney General John Ashcroft is using his remaining influence in the Justice Department to lobby on behalf of the National Association of Broadcasters against the
proposed satellite radio merger -- though it seems that he's acting more out of self-interest than anti-trust ideology in this debate, as the Wall Street Journal is reporting that Ashcroft's consulting firm initially approached XM before eventually being hired by NAB. As you might imagine, then, Ashcroft's letter the House and Senate Judiciary Committees was decidedly anti-amalgamation, concluding that "the proposed Sirius/XM merger, which reduces the number of competitors from two to one, raises most serious competition concerns." Of course, now that everyone knows Ashcroft originally intended to shill for XM before NAB "opted to pay him to parrot their views" (according to an XM spokesperson), his "professional opinion" on the matter will probably hold decidedly less weight. Still, the WSJ revelation apparently didn't stop Ashcroft from enjoying his weekend, where at various times he was spotted listening to his iPod, jamming out to HD radio, streaming NPR over the Internet, and of course nodding in agreement as Rush Limbaugh espoused his opinions over the free analog airwaves.
Reader Comments (Page 1 of 1)
Dan @ Mar 5th 2007 10:58AM
Any guy that cloaks justice cuz she's baring her breasts at him is okay in my book.
He does everthing gooder.
Badtz Maru @ Mar 5th 2007 10:58AM
Why can't our government be reformed to shut-out these stupid influence peddlers?
Richard @ Mar 5th 2007 11:48AM
Maybe XM wouldn't play "Let the Eagle Soar"?!?
Chocolate Starfish @ Mar 5th 2007 12:16PM
XM and Sirius aren't the only two competitors in this space. The core product they are serving up isn't "kewl from teh satelitez," it's streaming music. There are many competitors offering this product through the very entrenched FM and AM formats (well, not really many. ClearChannel has a virtual monopoly in this space).
Actually, because so many AM/FM radio stations are owned by the same parent company, having a beefier, more competitive satellite offering may be the best thing for consumers. I think most consumers, when presented with excessive pricing from Sirius don't necessarily switch to XM (or vice versa) -- they revert to "free" radio broadcasting. There are too many ways for consumers to get music in their cars and homes to worry about satellite radio providers getting into monopolistic pricing problems.
Joe Shmoe @ Mar 5th 2007 12:46PM
You cannot really compare satellite to terrestrial radio. That's like saying broadcast television is a competitor to cable television. They are an alternative, there is no question of that, but they are not analogous. Narrowing the the competitive field from two to one is anti-consumer practice and there's no way around that.
As for lobbyists jumping camps from one side to the other, you'll find that it has no effect whatsoever on his credibility on the hill. Lobbyists have no need for credibility to begin with, they are looking out for whoever pays the bills, personal politics be damned.
Ken @ Mar 5th 2007 1:30PM
Competition does not need to be technologically similar to be valid. You don't feel that satellite TV is proper competition to cable? You can switch satellite TV providers, but try to switch cable provider. Hell try to switch away from Clearchannel on FM. XM and Sirius have very right to merge. If people feel they are getting pressured by prices then they switch off and listen to AM/FM.
matt @ Mar 5th 2007 1:34PM
So it is the engadget position that all lobbyists are bad, or just republican lobbyists?
"acting more out of self-interest than anti-trust ideology " - I assume that engadget is the only group of people that have no self-interest
I am a 5 year subscriber to XM... I like competition... I Like knowing that if XM hikes it's prices or pulls programming I like, I can make them compete for my business by leaving them.
I am NOT to happy that there will not be any competition in the sat radio market if this goes through.
But maybe I am not allowed to hold that positions since I am a subscriber to XM, and there by am ... "acting more out of self-interest than anti-trust ideology "
I can't go with the engadget logic that feels that "self-interest" means your viewpoint is invalid or without merit.
Esp since I have never met a single person that did not have self-interest as their primary personality trait. ;)
Rich @ Mar 6th 2007 10:29PM
@matt
It's hard for me to understand how you cannot draw a distinction between defending a position because the success of that position contributes to one's own self interests and defending a position because your self interests have been taken care of in the form of cash payments. One involves a genuine belief in the issue and the other is lying about one's beliefs because you have been paid to do so.
Frankenstein Black @ Mar 5th 2007 1:39PM
WHY ARE PEOPLE SO CONFUSED BY THIS? JUST THINK CABLE!!
Competition for a merged satellite radio system comes from Internet audio streaming, Downloaded medium (iPod, Napster, etc) “free” radio, Pod-casting and oh yea, HD radio. That’s just the fact here folks, not spin. Matter of fact Cable at the time they got the “regulatory nod” had zero real competition!
The reality is that a merged Sat radio system “strengthens” competition (by breaking the grip of company’s like CCC) and why do I have to buy 2 separate units to listen to Opera, Stern, Bubba or O&A? It also gives artists another outlet to pedal their warez!
PS As far as Ashy? Please, that scumbag already showed us his true colors and they certainly aren’t red, white or blue. Now go sing a song somewhere, dirt bag!
matt @ Mar 5th 2007 9:14PM
"Competition for a merged satellite radio system comes from Internet audio streaming, Downloaded medium (iPod, Napster, etc) “free” radio, Pod-casting and oh yea, HD radio."
yeah... cuz we ALL have unlimited roving high speed internet anywhere we drive in America... give me a break. :)
Sat Radio gives several hundred audio options in real time... more listening options than commercial radio... on the road... no wires... no downloading... no podcast... it is a unique medium to jump between cnn headline news... to jazz music... to npr...to c-span...or ESPN Radio...etc.
it is simply void of common sense to compare the sat radio medium to any other listening experience. sure there is "competition" from outher forms of audio delivery... but it is not NEARLY as competitive as 2 companies offering the same product concept with different pricing and programming.
It's like saying email and snail mail competes with cell phones so we can combine all cell phone carriers to one company and there will still be fair competition.
Maybe if you could look at the issue without the lens of your own political bias, you could see things clearly. but then again... most people do not like to see things pass their bias.
My political bias wants government to stay out of business... period.
as a consumer of the product in question... on this issue... I always want there to be another sat radio option I can take my business to...
on this issue I have too look past my political bias... Judge it on it's merits...
and as many have done on this page... when you resort to name calling and blanket statements of hatred for certain people... you reveal that you are NOT standing on a platform for of logic and reason.
5th graders call people names to validate their position... Adults think through issues and participate in the debate without resorting to: "scumbag"..."Tards!"... "evangelical fruitcake" ... "stupid influence peddlers"..."dumb ass" ...
If that is what you bring to the table to give credence to your position... better step aside and let the grownups talk about these "big people issues" ;)
Frank @ Mar 5th 2007 2:16PM
Ashcroft is an evangelical fruitcake who lost his bid for governor of Missouri to a dead man. Literally. This guy has less credibility than Rush Limbaugh at a D.A.R.E. assembly.
Frank @ Mar 5th 2007 3:11PM
Sorry, make that Senator.
Joe Shmoe @ Mar 5th 2007 2:45PM
Satellite and Cable TV offer much the same functionality to consumers whereas satellite and Broadcast radio do not compare in this respect.
Also, pointing out that I do not have my choice of cable providers is not a point in your favor. I would argue that forcing me to deal with a single regional provider is just as anti-consumer as the XM-Sirius merger would be.
Any economist would tell you that competition lowers prices and lower prices lead to a more efficient allocation of wealth and a generally better economy for everyone. Artificially narrowing the field of service providers does nothing to encourage the growth of the industry and I believe will set satellite radio back ten years in terms of rate of adoption and technology growth.
Rick Lyon @ Mar 5th 2007 3:17PM
So two competitors losing money merge into one company to lose money and that's a monopoly that needs to be addressed by the federal government? Just shows how stupid a choice Bush made selecting him AG in the first place.
John, dude, there is no competition! HAHA, if someone wants to launch some sats into space and lose money by overcharging for radio quality commercial free music then they can whether this merger happens or not! What a dumb ass conservative political tool.
Michael Hayes @ Mar 5th 2007 3:26PM
NPR??? Ashcroft????
Chocolate Starfish @ Mar 5th 2007 3:37PM
My views may be a bit more laissez fair than many, but I also say that satellite radio and cable tv are luxury items. You won't die without them. You won't perform your job any better or worse without them. It is a strictly "want" item. There's no reason for the government to worry about how such items are being priced. These luxury items are competing with all other luxury items for the consumers' dollar (fine wines, amusement parks, video games, gadgets, cigars, restaurant dining) and if they are priced uncompetitively, they won't be patroned.
My point in both posts is that satellite radio providers have many more competitors than each other. If a sirius/xm merger starts raising their prices to a prohibitively costly level, I'll walk when my current contract ends and listen to music streamed from my DAP or terrestrial radio. No harm done to me, all harm done to the provider.
Monopoly pricing abuses really only matter when the product in question meets a "need."
Don Cooper @ Mar 5th 2007 8:07PM
Let's get real. I think too many on this board are spending way too much time reading XM/Sirius spin and not enought time thinking for themselves. A few points:
1. No on can think that a MONOPOLIST will deliver lower prices or better service. It won't happen. In fact, the very fact these companies want to merge is that they know better -- the stated reasons are that the combined entitiy will make more money. Now how much you as a consumer gets hosed depends on many factors, including elasticity of demand, but consumers are better off with two rather than on providers. To suggest otherwise is absurd.
2. Arguing substitute services is impossibly goofy in this context. If, as has been suggested, other streaming services were a substitue, then why would anyone pay anything for satellite services since the claimed substitutes are FREE. The fact that satellite service is not free more or less disposes of this claim because as far as I know, there has not been a service in the history of mankind that has been able to compete with a FEE substitute.
3. Why should the taxpayers let these guys welch on a promise without extracting anything in return? C'mon. Haven't we sworn off corporate welfare for billionairs? As a condition of the license, these clowns agreed not to merge. Now they want to have the restriction erased. Maybe that would be OK, but where is the quid pro quo? If their claim is that the space can't support two providers, then why not, as a condition of amending the license, require them to RETURN half the spectrum? Then the FCC can put that to some other, higher value use, and everyone will be better off.
4. I can't figure out why taxpayers have to bail out dumb guys with too much money. Look at who invested in this idea: Ford Motor Company and the like. Anyone with half a brain would have figured out that the market for this would be small. Maybe it's just my fiscally concervative self, but I have no sympathy for idiots who climb out on small limbs and then want the fire department to come to the rescue.
Mr. Cats @ Mar 5th 2007 4:15PM
More technology reporting, less biased political hackjobs. Engadget is starting to sound like Air America.
Thanks
Smoke_Dawg_187 @ Mar 5th 2007 8:22PM
@ Chocolate Starfish:
You're absolutely right!
Joe Shmoe & Matt = Tards!
Smoke_Dawg_187 @ Mar 5th 2007 8:50PM
Don Cooper:
The thrust of NAB President and CEO David Rehr testimony was that a merger would create a monopoly and the new company “could also use cross-subsidies to engage in anti-competitive against local broadcasters.” A number of NAB folks sat in the gallery wearing red round stickers with white writing that read “No Satellite Radio Monopoly.”
But that argument may have gone down in a red ball of flames when Rep. Anthony Weiner (D-NY) asked Rehr ”Do your broadcasters offer talk programming?” “Yes,” answered Rehr. Karmazin was asked the same question and he also answered “yes.“ What about sports programming? Weiner asked Rehr. “Yes,” to that to. Same with Karmazin. The answers were the same from both men about other formats, too.
“This monopoly argument has been wildly exaggerated!” squealed Weiner. “No one needs to have radio. No one needs to have this product! One hundred percent of computers have the ability to download content, to down load podcasts,” added Weiner. “Sometimes mergers serve to help an industry.” http://www.mediaweek.com/mw/news/tvstations/article_display.jsp?vnu_content_id=1003552210&imw=Y
First, the government needs to serve the best interest of the public. In this case the government collects money from the licensing of the spectrum, collects money from the earnings of the company, and collects income taxes from all those employees. Is it really in the governments interest to have neither company license the spectrum? Neither has made a profit, so why not make an exception? 14 million people would agree to having 1 satellite radio company than none.
Second, this is not a monopoly of satellite radio. A monopoly is based on something that is a comodity item. Satellite, as someone mentioned earlier, is a luxury item. That's a big distinction there.
As far as your 2nd point: Take online multiplayer for instance. WoW has over 14 million users, and Xbox Live has 5 million users. People will pay if there is content.
Also they can't return half of the spectrum because that would leave consumers of one brand out of luck. That is why they will continue to license both spectrums so that they can continue support for older radios. Not everyone is going to be happy to buy new equipment right?
Don Cooper @ Mar 6th 2007 2:00AM
Just a few points to clarify:
1. The government doesn't get an annual license fee for the spectrum. It's once and done. Think of it as a perpetual lease with a one-time payment.
2. The problem is that the government doesn't simply license the spectrum for any purpose. It decides what purpose would be in the public interest and licenses it for that purpose. In this case it decided that satellite radio was a necessary service and that it was necessary to have two competing companies.
3. The companies will not go out of business. I have no idea where this comes from. They may go through Chapter 11 bankruptcy but they would come out. The only real losers in this scenario would be the shareholders, the bondholders, and the banks. Hold the tears.
Just as an aside here, I find the argument that the companies need to merge to be laughable. Why? Because the only reason you believe this is because they've told you. And why is this laughable? Because they are the same guys who have been saying what a great business opportunity this is for years and years. And they're still doing it. You can't have it both ways. I don't know if they were lying then or are lying now but my guess is both.
4. This is not a regular business. This is a government created duopoly. No government, no business. So unlike some have suggested, a laissez faire approach would be never to have had the business in the first place -- just auction off the spectrum for any use. That I could understand.
5. Anyone who thinks this merger will be in the best interests of consumers is seriously misinformed. There are only three relevant factors in determining price level: number of entrants; barriers to entry; elasticity of demand. This is one of those special cases in which the barriers to entry are infinite (no license no entry). So if you only have entrant, then the only limit on margins is the elasticity of demand. Bottom line: prices are going to be higher, far higher, than they would otherwise be.
6. The argument that this is a luxury service and therefore not subject to the ordinary merger rules is plainly wrong on several fronts. First there is no legal basis for it. There isn’t one set of rules for "commodities" and a second for "luxuries". Second there is no economic basis for such a distinction. One person's luxury is another's necessity. And these things change over time. Ten years ago cell phones were luxuries. Now many would say they are necessities.
Smoke_Dawg_187 @ Mar 5th 2007 8:52PM
Don Cooper:
The thrust of NAB President and CEO David Rehr testimony was that a merger would create a monopoly and the new company “could also use cross-subsidies to engage in anti-competitive against local broadcasters.” A number of NAB folks sat in the gallery wearing red round stickers with white writing that read “No Satellite Radio Monopoly.”
But that argument may have gone down in a red ball of flames when Rep. Anthony Weiner (D-NY) asked Rehr ”Do your broadcasters offer talk programming?” “Yes,” answered Rehr. Karmazin was asked the same question and he also answered “yes.“ What about sports programming? Weiner asked Rehr. “Yes,” to that to. Same with Karmazin. The answers were the same from both men about other formats, too.
“This monopoly argument has been wildly exaggerated!” squealed Weiner. “No one needs to have radio. No one needs to have this product! One hundred percent of computers have the ability to download content, to down load podcasts,” added Weiner. “Sometimes mergers serve to help an industry.” http://www.mediaweek.com/mw/news/tvstations/article_display.jsp?vnu_content_id=1003552210&imw=Y
First, the government needs to serve the best interest of the public. In this case the government collects money from the licensing of the spectrum, collects money from the earnings of the company, and collects income taxes from all those employees. Is it really in the governments interest to have neither company license the spectrum? Neither has made a profit, so why not make an exception? 14 million people would agree to having 1 satellite radio company than none.
Second, this is not a monopoly of satellite radio. A monopoly is based on something that is a comodity item. Satellite, as someone mentioned earlier, is a luxury item. That's a big distinction there.
As far as your 2nd point: Take online multiplayer for instance. WoW has over 14 million users, and Xbox Live has 5 million users. People will pay if there is content.
Also they can't return half of the spectrum because that would leave consumers of one brand out of luck. That is why they will continue to license both spectrums so that they can continue support for older radios. Not everyone is going to be happy to buy new equipment right?
Smoke_Dawg_187 @ Mar 5th 2007 11:09PM
@ Matt: "it is simply void of common sense to compare the sat radio medium to any other listening experience. sure there is "competition" from outher forms of audio delivery... but it is not NEARLY as competitive as 2 companies offering the same product concept with different pricing and programming"
Yet both services cost exactly the same per month and offer nearly identical programming less the few exclusives. Like I quoted earlier from Rep. Anthony Weiner (D-NY). Both services offer sports, talk, news, music thus making terrestrial and satellite equal competitors. Format wars do not benefit consumers. VHS vs BetaMax, DVD+R vs DVD-R, HD-DVD vs BluRay. 1 provider would make it a lot easier for people to choose what they want. I'll be really happy to be able to listen to both NFL & MLB.
Plus having friends work in the radio industry, they do research on what people are listening to and satellite radio is a tiny competitor compared to the iPod and terrestrial radio.
Matt, who's childish? : "... I always want there to be another sat radio option I can take my business to... "
I'd like chocolate coming out of the water fountain too, but that's not reality. What IS reality is that both of these companies will probably go out of business if they continue to compete. Would you rather see that?
In 5 years most big cities will probably have WiFi, and if WiMax takes off it will cover a much larger area. So, yes, the interent does and will continue to be a factor in this. Wasn't there just a post of someone playing Xbox Live in the car on Google's Wifi in San Fran?
tfresca @ Mar 5th 2007 11:59PM
The thing these guys won't say is that both of these companies are burnin through cash, separate companies won't survive. We can either have one sat radio company or no sat radio companies.
QuantumOverview @ Mar 6th 2007 12:05AM
Bot this wasn't a biased report at all.
hibiscusroto @ Mar 7th 2007 1:34PM
I stopped listening to terrestrial radio the day after Howard Stern's last broadcast and have not looked back since. The 10 to 20 minute commercial segments, the stale payola-induced music selection, the government censorship...I don't miss it for a second. If I had a choice between a loud high-pitched sound and FM radio I would choose the former.
And the fact that a person that used to work for the president is now working for an organization that needs presidential (government) approval in order to do business is the very definition of "competition conerns" in my book.
The NAB, Clear Channel, Viacom, the FCC and John Ashcroft all deserve each other...and America deserves better.
Loonie @ Mar 7th 2007 11:17PM
Oh good god, I thought we might have seen the last of his stupid, fat, sanctimonious, wrong face.
Jonas Waxman @ Nov 5th 2007 7:02PM
Who does John Ashcroft work for now?