WASHINGTON, DC – - NAB Radio Board Vice Chairman Russ Withers, owner of Withers Broadcasting Companies testified today before the Senate Committee on Commerce, Science and Transportation regarding the proposed monopoly merger of XM and Sirius. The following is a transcript of his oral testimony.
Good morning Chairman Inouye, Vice Chairman Stevens and Members of the Committee. My name is Russ Withers. I am the owner of Withers Broadcasting Companies, which operates 30 local radio stations and six television stations in seven states, including Missouri and West Virginia.
I am testifying today on behalf of the National Association of Broadcasters, where I serve as vice chairman of the NAB Radio Board and a member of the Executive Committee. I am here to voice opposition to the proposed merger of this country's only two nationwide satellite radio companies, XM and Sirius.
Satellite radio is a national radio service that provides hundreds of audio programming channels to listeners across the country. There are only two such services, and they compete against each other in the national marketplace. The undeniable fact is that XM and Sirius want government permission to take two competitive companies and turn them into a monopoly.
When the FCC allocated spectrum to Sirius and XM in 1997, it specifically ruled against a single monopoly provider. The Commission foresaw the dangers of a monopoly. It explicitly licensed more than one provider to ensure "intra-market" competition and to prohibit one satellite radio provider from ever acquiring control of the other. There is no reason to change that position now.
Currently, Sirius and XM occupy 25 megahertz of spectrum allocated by the FCC for nationwide satellite radio service. With a new monopoly and a merged entity, they will continue to control this entire block of spectrum, preventing any new entrant from offering national, satellite radio service and competing against their new monopoly.
These companies have claimed that no one should worry about this monopoly, because local radio competes against XM and Sirius. Let's be very clear on this point: radio broadcasters do not compete in the national market of the satellite radio companies, but XM and Sirius do compete in the local radio markets – markets that I operate in everyday – markets like Cape Girardeau and Sikeston, Missouri.
Local radio stations can only broadcast within their FCC-defined coverage area. Local broadcasters' signals are not nationwide, and are not subscription. The national availability of satellite radio sets it apart from local broadcasters. Withers Broadcasting operates in small and medium markets like Bridgeport, West Virginia.
We are the voice of the community in times of emergency and have a unique connection to our listeners that no other medium provides. XM and Sirius, by contrast, offer a pre-packaged bundle of national, mobile digital audio channels. KGMO in Missouri delivers outstanding local news, sports and entertainment.
Consumers, however, would never consider my station's local programming a comparable product to Sirius' 133 channels or XM's 170. A local radio station's programming is clearly not a substitute for the array of services offered by XM and Sirius. Services like XM and Sirius compete with each other - and no one else - in the national satellite radio market. In fact, a recent FCC report and analysis on satellite market conditions shows a very healthy and competitive national, satellite radio market. Following U.S. Department of Justice merger guidelines the FCC defines the market participants as two providers, XM and Sirius.
The report also finds the geographic aspect of this market to be national, subscription, and offering nationwide-licensed choices. These are inherently different characteristics and services than that of local radio broadcasters. I can understand why XM and Sirius would want a monopoly, but that does not mean it is in the public interest. XM and Sirius, by their own admission, are not failing companies. Their current highly leveraged position is due to extraordinary fees paid for marketing and on-air talent, including the $500 million contract that Sirius awarded to Howard Stern and the $83 million dollar bonus paid to him just last year. But even with these costs, XM and Sirius have made clear they can succeed without a merger.
For these reasons and others, local broadcasters strongly oppose a government-sanctioned monopoly for satellite radio.
The National Association of Broadcasters is a trade association that advocates on behalf of more than 8,300 free, local radio and television stations and also broadcast networks before Congress, the Federal Communications Commission and the Courts. Information about NAB can be found at www.nab.org.