My family subscribes to both XM and Sirius satellite radio. The reason is that XM has a deal with the manufacturer of my car, and Sirius has a deal with the manufacturer of my wife's car. When I heard of the possibility of an XM-Sirius merger, my reaction as a consumer - not to mention an economist - was: Sounds good!
I severely doubt that prices will go up by much (thought perhaps they should - satellite radio has yet to turn a profit), and I'm confident that there will be more selection. And perhaps more importantly, it also boosts my confidence that satellite radio will continue to exist despite the indifference of the iPod generation. (I pre-paid XM for five years, and I get nervous every time I poll my undergrads and find that none of them subscribe).
Unfortunately, everyone doesn't share my positive reaction. As usual, there are two groups who oppose this merger and just know that it will be a disaster for the world.
First, "consumer groups" like C3SR (Consumer Coalition for Competition in Satellite Radio). Here's what one of its founders, Chris Reale, has to say:
“[A] monopoly satellite radio provider would be able to raise prices and cut programming to a growing number of consumers that have come to rely on satellite radio for news and entertainment.” He adds, “If this merger is permitted to go forward, there will be no protection of competition and there will be no competitors."
[...]
“Our main goal right now is to stop this merger,” Reale added. “If a merger were to be approved, subscribers would likely end up paying more for less programming, and would end up subsidizing unwanted services.”
Which is it? Will there be less programming, or subsidization of unwanted services?
To answer that question, we need look no further than the second group of merger opponents: The National Association of Broadcasters, also known as Lobbyists for Old-fashioned Unlistenable Land-based Radio. Here's what they've got to say:
"Given the government's history of opposing monopolies in all forms, NAB would be shocked if federal regulators permitted a merger of XM and Sirius...
"In coming weeks, policymakers will have to weigh whether an industry that makes Howard Stern its poster child should be rewarded with a monopoly platform for offensive programming. We’re hopeful that this anti-consumer proposal will be rejected."
Shocked, shocked!
Where have I heard this before? Call me a cynical economist, but this is just the kind of whining we'd expect if the NAB realized that the XM-Sirius merger would make satellite radio
more attractive to consumers. If the merger were really going to lead to higher prices and less selection, the purveyors of Old-fashioned Unlistenable Land-based Radio would be celebrating.
P.S. If you really hated Howard Stern, wouldn't you want his services to be sold by a monopoly? Maybe not, once you realize that "merger to monopoly" will supply Stern to millions of additional listeners.
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