My colleague Scott Wallsten, PFF’s Director of Communications Policy Studies, filed comments at the FCC this week regarding the proposed merger of satellite radio providers XM and Sirius. Scott points out what many of the merger critics have failed to appreciate:
[C]ompanies like these are platforms in two-sided markets that must find ways to attract subscribers and content. Both subscribers and content providers can choose among a variety of platforms. Moreover, the platforms themselves are dynamic in that they could potentially carry any digital information, not just the particular services they currently offer.
In short, a merger analysis of competing platforms that considers only a single component in this complex market is likely to reach an incorrect conclusion. In the case of the XM-Sirius merger, officials should consider not only subscribers, but also content providers, competing platforms, platforms that are potential competitors, and services the platforms in question may provide in the future that they do not today.
This seems like the most obvious thing in the world to me, and yet I have been shocked to see how many people are opposing this merger using the narrow-minded logic that XM and Sirius operate in a solitary market, free of external pressures and threats. It’s absolute lunacy to me. Frankly, as I argued in this lengthy essay I penned on the topic the night the merger was announced, I just don’t see how both these firms can survive in the long run unless they merge. The competitive pressures are just far too intense with all the competition for our ears these days.
Anyway, read Scott’s filing for an even better analysis.
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