Wednesday, March 07, 2007

New House Antitrust Task Force Considers Satellite Radio Merger

This posting was written by John Scorza, CCH Washington Correspondent.

The House Judiciary Committee established an antitrust task force on February 28, and the task force's first order of business was to consider the recently proposed XM-Sirius Radio merger. The task force is slated to operate through August.

The task force heard testimony on the competitive impact of the XM-Sirius Radio merger. Mel Karmazin, CEO of Sirius, said the merger was necessary to preserve and enhance choices for consumers. He defended the proposed deal, claiming it would lead to lower prices and greater competition in the audio entertainment marketplace.

“Fundamental Issues in Antitrust”

Other hearing witnesses criticized the proposed merger, warning it would create a monopoly in the satellite radio industry. The merger of the only two satellite radio providers "raises the most fundamental issues in antitrust and poses a substantial threat to consumers and competition," according to Mark N. Cooper, director of research at the Consumer Federation of America. Cooper urged federal regulators to reject the proposed deal, noting that regulators had required the companies to agree not to merge as a condition of receiving their operating licenses.

David K Rehr, head of the National Association of Broadcasters, also opposed the merger. "One can easily see what XM and Sirius are really asking for here," said Rehr. "They want the ability to set subscription prices for national satellite radio service without constraint from a competing service. They want to eliminate the need to compete with another national service provider to acquire programming and talent that wish to reach the national audio market. They want the ability to demand exclusive access to attractive programming, such as sporting events. And, they want to reduce the need to spend money on innovative service and equipment for consumers."

Gigi B. Sohn, president of Public Knowledge—a public interest advocacy group—suggested that the merger be approved, subject to conditions, including a three-year freeze on the price the new company would charge for its satellite radio services.

Task Force Membership

The Judiciary Committee chairman, John Conyers Jr. (Michigan) chairs the antitrust task force. Other Democratic members are: Representatives Howard Berman (California), Rick Boucher (Virginia), Zoe Lofgren (California), Sheila Jackson-Lee (Texas), Maxine Waters (California), Steve Cohen (Tennessee), Anthony Weiner (New York), Artur Davis (Alabama), and Debbie Wasserman-Schultz (Florida).

Republican members are: Ranking Member Steve Chabot (Ohio), Deputy Ranking Member Ric Keller (Florida), Ex-officio Ranking Member Lamar Smith (Texas), and Representatives James Sensenbrenner (Wisconsin), Bob Goodlatte (Virginia), Chris Cannon (Utah), Darrell Issa (California), J. Randy Forbes (Virginia), and Steve King (Iowa).

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