James Gattuso

National Association of Broadcasters v. National Association of Broadcasters

Broadcasters have long had one of the most powerful lobbying organizations in Washington. But it now seems that the National Association of Broadcasters has met its match — an equally powerful outfit known as the National Association of Broadcasters. Yes, that’s right — NAB, under new president David Rehr, has been shooting quite effective bullets recently at itself.

The battle was triggered by the proposed merger between XM and Sirius Satellite Radio. NAB has gone on the warpath against the merger, arguing that it would create a monopoly. Of course, to argue that, it has to argue that broadcast radio doesn’t compete with satellite radio. That argument, however, was rebutted by NAB’s David Rehr (yes, the same one), who just last year gave a stirring speech about broadcast radio’s satellite competitors, declaring:

In 2006 we have satellite and Internet radio. And barely a day passes without the introduction of a new competing device or service. And we have news for our competitors: “We will beat you — as we have beaten those change agents in the past.”


The NAB, however, is far less optimistic. “A local radio station’s programming is not a reasonable alternative to the array of services offered by XM or Sirius,” Rehr recently wrote.

But Mr. Rehr (circa last fall) isn’t so awed by the satellite guys, saying “Their business models are bankrupt.” He is also more bullish on broadcast radio’s strengths than is the pessimistic Mr. Rehr: “We are building our future on our greatest asset — localism. No one can compete with us in this arena.”

This week the fight between the two powerful lobbies escalated further. In response to a study by George Mason’s Tom Hazlett that found the XM-Sirius merger would benefit consumers, an NAB spokesman said:

This report defies logic. The study’s contention that consumers would benefit from a monopoly merger of the only two satellite radio services is laughable, as evidenced by the fact that Consumers Union and the Consumer Federation of America are opposing the merger.”

This blanket endorsement of CU and CFA as the ultimate authority on what benefits consumers is startling. Its a clear slap in the face by NAB against NAB, given the fact that both groups have long supported strict regulations on broadcast ownership — many of which NAB has said are anti-consumer. In fact the groups have called NAB’s work on the issue “misleading and irresponsible,” and even “fraudulent.”

I can’t imagine how NAB will respond to this implicit attack on its integrity.

This is a lobbying war worth watching.

June 15, 2007 | Comments |

Viewing 3 Comments

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    As those of us who live in an area served by only two broadband providers know, two competitors do not make a market. One provider, even less so.

    Sure, XM and Sirius compete, in a broad sense, with internet radio and terrestrial broadcast radio. Broadly speaking, CDs compete with DVDs and video games for a piece of a consumer's entertainment dollar. In a way, satellite radio competes with CDs, too. However, I don't believe it would be better for the consumer if all four major record labels merged into one. Whether you call it a monopoly or not -- in this case, the term would be misapplied -- is beside the point.

    TLF sometimes defaults to a doctrinaire position on anti-trust. In this case, the consumer may benefit or be hurt by such a merger. No one can predict the final outcome, but there are valid arguments to be made against the merger. Ridiculing the NAB is not an argument in favor of the merger. The representatives of the NAB are simply alternately expressing their hopes and their fears. That makes them sound inconsistent, which they are. And that, by itself, proves nothing.
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    OK, can you please tell me how the merger is a bad thing? More doesn't make it better for consumers in all cases. A monopoly - market share and pricing power. XM and Sirius have raised their prices a total of once, that's right, once since they have been operating. So please stop all this monopoly talkand how it's not good for the consumer stuff. I don't know about you, but I would love to get NFL coverage and College Football games on the same service, one service. Everyone who say's this is bad for the consumer, please edcuate me and others and give us specific examples. And not "soaring prices" because even without the promised price caps, which the FCC could easily impose to make that a non-issue, if the price got too expensive, I would just drop the service as it's not a necessity commodity. Please, why are wasting time on two radio companies when food and energy continue to soar year after year? Why don't somebody do something about $3.00/gal gas instead of worrying about audio entertainment. The NAB has no merit for it's case except that two satellite providers will be reduced to one, a monopoly. So what, the one would be a better product for consumers than the two. The NAB has 230 million listeners to Satellite radio's 14 million. They are the monopoly.
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    You are correct. They would join from a duopoly to a monopoly. They would have explicit pricing powers to raise prices as high as they want.

    Except for one fact: They are competing against free. All of the alternatives to Satellite Radio: HD Radio, iPods, Terrestrial radio, internet radio (in areas where city/county wide WiFi is available) are all alternatives to SatRad. While none of them may be nation wide, they are all alternatives. And they are all free, minus the initial cost of equipment.

    How about this fact: This all powerful monopoly that you keep saying the merger will form will host a grand total of about 3% of the listening population? How about the fact that they will command a whooping 7% of sales revenue for the radio industry if placed in the same category of terrestrial radio.
    I am an XM subscriber and I cant wait for the merger to go through. But what if I am wrong? What if Mel Karmazin's diabolical scheme to charge $50 a month comes true? Simple: I cancel and switch back to either my iPod or terrestrial radio, both of which are free. Satellite Radio is not a necessity and when they raise their prices, people can and will switch to free alternatives. Why do the anti-merger people not see that?

    Besides, with an estimated 3-7 BILLION (thats right, with a B) in merger synergies (that means money the combined company will be able to save as a single company) they do not NEED to raise prices to make money.

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