WASHINGTON, DC – A recent FCC analysis of satellite competition determined that the relevant market for satellite radio consists solely of XM and Sirius. The FCC relied on antitrust law and the Department of Justice Merger Guidelines in finding that other audio services such as terrestrial radio (including HD radio), iPods, and Internet radio are not competitive substitutes for XM or Sirius. Below is a statement from NAB President and CEO David K. Rehr and the full text of an article from Communications Daily covering the FCC's action.
"This FCC decision that the current duopoly of XM and Sirius do not compete with radio, iPods or any other audio sources in the satellite radio market further undermines the arguments made by XM and Sirius to obtain a government-sanctioned monopoly. While the FCC clearly intends to examine all issues surrounding the XM/Sirius merger, the hurdle the parties must overcome to convince the FCC to change direction is very high. This is a dramatic blow to XM/Sirius' presumption of a broader market, and still more evidence that XM and Sirius compete ferociously against each other in the market for nationwide multichannel mobile audio services, and no one else."
WEDNESDAY, MARCH 28, 2007 VOL. 27, NO. 59
FCC DEFINES SATELLITE radio market, then steps back from definition, as text of competition report is released. (P.7)
FCC Defines Satellite Radio Market As Not Including iPods
The FCC excluded other audio entertainment from a reviewof competition in satellite radio. But the analysis "may notreflect the appropriate markets to be considered" in a mergerreview, the Commission said. XM and Sirius have tried tojustify their proposed merger based on competition fromiPods, HD Radio and other forms of audio entertainment (CDMarch 21 p2). The satellite competition report was writtenat Congress's request.
The Commission voted on the satellite competition reportat its March 22 meeting, (CD March 23 p9) but gave fewdetails. Democrats complained that the report didn't includeinformation from the merger of Intelsat and PanAmSat. Thedocument says data for the report was collected before themerger closed. The report doesn't explain why it doesn'tassess the effects of the Intelsat-PanAmSat merger and SES-New Skies mergers, though they were completed the first halfof 2006. Privatizing Intelsat has been good for the U.S.,the FCC said, giving Intelsat the chance to develop newservices for the U.S. market.
The Satellite Industry Assn. submitted a Futron studybased on data through 2005 noting that revenue for satellitecommunications services was 60% of satellite sector revenue,up from 45% in 2000, the FCC said.
The video distribution market is offering point-to-pointcapacity full time or for occasional use, the FCC said.Variations in the market that affect the buyer-sellerrelationship include whether someone contracts for full timeuse or occasional use, and whether the contract isprenegotiated, the FCC said. Satellite participants includeIntelsat, SES Americom, Loral and EchoStar, the Commissionsaid. Land-based video distribution is available only wherewire, coaxial or fiber is available, the FCC said:"Satellite distribution, in contrast, is potentiallyavailable to and from any point within the coverage area of asatellite." -- Heather Forsgren Weaver
Reprinted with permission from 'Communications Daily.'
About NAB 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