Bryan Caplan  

What to Learn from the XM-Sirius Merger: The "Friends of the Consumer" Are Your Enemy

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Despite vocal opposition from lobbyists for terrestrial radio, it looks like satellite radio providers XM and Sirius will finally get to merge. It only took 17 months, plus some absurd concessions:

The deal reportedly will also include a three-year price freeze and two-dozen channels dedicated to noncommercial programming.
Yes, that's right. A price freeze for firms that are losing so much money they still might go bankrupt. And a legal requirement to carry a bunch of stations hardly anyone wants. It's a classic case of Orwellian "pro-consumer" regs that discourage innovation and equate "the public interest" with "that which does not interest the public."

By the way, don't confuse "noncommercial" with "commercial-free." Here's a fair summary:

"Noncommercial", in this context, clearly doesn't mean advertising-free, since that would apply to nearly all of the programming. And it doesn't mean programming which is available without a subscription, either: you'll need to pay to listen to anything on satellite radio. It doesn't even mean diverse programming: the whole satellite radio business model is based on the idea of providing a vast range of options to subscribers, thereby maximizing the number of people you're potentially appealing to.
What "noncommercial" really means is "public educational broadcasters, non-profit educational institutions, and local low-power radio stations." The horror! The horror!

Of course, it could have been worse. FCC hold-out Adelstein was pushing for...

...a six-year price freeze and for more noncommercial channels than XM and Sirius have agreed to create.

"Instead, it appears they're going to get a monopoly with window dressing," he said Wednesday. "We missed a great opportunity to reach a bipartisan agreement that would have benefited the American people."

Gee, does this mean the best thing for the American people would be a permanent price freeze and nothing but hundreds of channels of "public educational broadcasters, non-profit educational institutions, and local low-power radio stations"? Wow, compared to that, even terrestrial top-40 sounds pretty good.

HT: Corina Capan


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COMMENTS (12 to date)
SheetWise writes:

It's interesting that the objections come from terrestrial radio. The creation of the FRC (forerunner of the FCC) in 1927 was in recognition of the fact that the airwaves belong to the public, and they are a scarce public resource. With this in mind, it was deemed necessary to ensure that broadcasters were worthy of the public trust that accompanied a license.

Today, the resource is not scarce. It is scalable, and it is expanding! My TV box can display up to 1000 channels, yet only offers about 150. Satellite Radio is an expansion product on top of existing bandwidth. If there is a shortage, it's a shortage of broadcasters and content -- not of resources to deliver it to consumers. With the scalability of modern services, increased resources, and expanded coverage in all markets, there is no reason to have any different standards for electronic media than those in place for print media. If the real motivation here is censorship -- and I think it is -- they should just say so. Then we can start that debate.

PrestoPundit writes:

Someone know why Bush put a leftist aid to Dem. Tom Daschle on the FCC?

Kurbla writes:

Well, it is more likely you'll find innovations on the public TV than on the commercial. Explanation is simple - in the role of consumers, people do not care for innovations. They prefer 17th version of the same old horror movie over any innovative documentary.

It is same for quality. Of course, consumers know that they consume products of the questionable quality, with very little innovations ... but it doesn't help much.

Sure, one can still prefer market solutions due to other reasons, however, the quality and innovations are the arguments for other side.

Dr. T writes:

The absurd demands related to the merger just show that if you give a government agency an inch of control, it extends it to 20,000 miles.

Jody writes:

Kurbla, if the quality and innovation on public TV is better than on commercial TV, why hasn't PBS won a primetime Emmy since 1977? And only 6 overall (all 6 for Masterpiece Theatre)

Here's the list.

Dain writes:

Public TV is BORING. One can say that somebody ought to support what only old people and a minority of younger people like - i dunno, ballet, opera, british comedies from the 80s - but don't call that proposal innovative or exciting.

There's a reason why that which is decided politically (read, democratically) is relatively immovable: getting a consensus, comprimising, is costly in time if not necessarily money. There's a reason why HBO and SHOWTIME and the like, on the other hand, are cutting edge. As Peter Gabriel once said: "Great books aren't written by a committee."

Kurbla writes:

Maybe because Emmy awards are not given for a innovation or quality of the program, but for some other criteria or combination of, and commercial success is maybe very important. I do not know how to explain choice of Sex & City, Sopranos, West Wing and others as the best programs in respective years on any other way.

Surely, one can retreat on the position that objective estimation of quality - if exists - is done by consumers, but it looks equivalent to the claim that objective estimation of the quality of the politics is done by voters. Surely, it is one aspect of the dilemma, but Bryan wrote the book because it is not the only one. It is even more obvious for innovation than for quality.

For a comparison one can look at [British 100 best] or [this year awards] which is dominated by public programs. I do not know how much commercial success influenced that list.

SheetWise writes:
For a comparison one can look at British 100 best or this year awards which is dominated by public programs. I do not know how much commercial success influenced that list.

Does it matter?

Really?

Go back to reading Friedman in Capitalism and Freedom before comparing the BBC to NBC/ABC/CBS et al.

Mike writes:

Sounds like Directive 10-289

Daublin writes:

A number a comments imply that popular media is cheaply done and of low quality, but that doesn't seem right to me. It's actually quite hard to make a show that is popular, and any entity that wants to do so is going to need to hire a lot of top talent. To contrast, it's much easier to make high-art media that is unconstrained by actually being pleasing to take in. You just spend a few dozen hours musing and then pop something out.

Maybe non-commercial material is more "innovative". I'll grant that. Does it really matter, though? We are talking about making ever more innovative stuff that no one even wants.

Mike D, writes:

Comparing U.S. TV to British television is comparing apples and oranges. It's part of the BBC's charge to create accessible, popular television. That's not what PBS was set up to do. Look at the list: Fawlty Towers. Doctor Who. What are the U.S. counterparts to those shows? M*A*S*H and Star Trek, not Nova and Masterpiece Theater. U.S. public broadcasting was deliberately designed as an alternative to the mainstream media. In Britain, it is the mainstream media.

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