Consumer Groups Oppose Sirius-XM Merger

Several consumer groups jointly sent a letter and "comment" to the FCC on Tuesday urging the commission to reject the proposed merger of XM and Sirius Satellite.

The $11 billion deal "is a merger to monopoly that will unleash the market power of the satellite digital radio service providers at the expense of the public," according to Dr. Mark Cooper, director of research for the Consumer Federation of America and the report's lead author. The 20-page document was also signed by the Consumer's Union, publisher of Consumer Reports, and Free Press.

The groups oppose the merger on various grounds, including "elimination of consumer choice," "reduction of competitive offerings," "the exercise of monopoly power" and "reduction in capacity." Noting that the plan does not involve price efficiencies to consumers, the authors dismiss the idea that the proposed a la carte menu would benefit them substantially.

They also rebut claims from XM and Sirius that their business situation is so dire they must merge. As they are "expanding their subscriber base and moving rapidly toward profitability, the merging parties do not claim a failing firm justification for the merger."



The groups are asking the FCC not to overturn its own rule that explicitly prohibits the groups from merging when they were chartered as separate entities in 1996.

While they await approval from the FCC and Justice Department, both satcasters are shifting their focus from new recruit subscriptions to automobiles, which generally come with free subscriptions lasting several months.

The satcasters have already partnered with every major automaker in the American market. Satellite radio is increasingly offered as a standard feature by new models. Also on Tuesday, Ford Motor Company said it would install Sirius satellite radio sets in 70% of Ford and Mercury 2009 vehicles this coming year, all carrying a 6-month free subscription. The Ford deal also covers Land Rover, Jaguar, Volvo and Mazda.

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