A Cynical Argument for the XM-Sirius Merger

Matt Yglesias channels Adam Thierer’s point about the XM-Sirius merger:

If The New York Times says a Sirius-XM merger is “sure to raise antitrust issues” then I’m happy to believe them. I have a hard time seeing a serious issue here, however. As is typical in these cases, the relevant think is the definition of the market. If you think there’s a discrete “satellite radio” market then, yes, a combined Sirius-XM entity would clearly have monopoly power in that market. Realistically, though, the product both Sirius and XM are selling–audio broadcasts–is one for which there’s a great deal of competition. Cable and satellite television providers are capable of delivering similar content, though in not as convenient-to-use a manner. People can listen to CDs, buy internet music subcription services, subscribe to “podcasts,” and, of course, satellite radio needs to compete with its freely available terrestrial radio counterpart.

After all, at the moment I–like most Americans–don’t have a satellite radio subscription even though I’m pretty gadget inclined. The logic of the business is that the merged entity needs to grow, which is to say continue trying to offer a deal that people find appealing compared to our many other entertainment options, not our satellite radio options.

Another, purely pragmatic consideration that makes me think this merger will be a good thing is that satellite radio is currently locked in a couple of high-profile lobbying battles in which they are, as far as I can see, on the side of the angels. They’re battling the RIAA over the “analog hole.” And they’re also fighting a protectionist proposal by terrestrial broadcasters to ban satellite radio from offering local programming. The merged company is likely to have the financial resources to retain a higher caliber of lobbying talent which will, I hope, allow them to prevail in both of those fights. Obviously, I’d prefer if companies could just focus on their business and not retain lobbyists at all, but if the RIAA and broadcasters are going to push blatantly anti-consumer legislation, I’d at least like to see the other side have the resources to fight back.

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