[A2k] Justice Department approves XM-Sirius radio deal

[Judit Rius Sanjuan]

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[ Picked text/plain from multipart/alternative ]
Justice Department approves XM-Sirius radio deal despite opposition
from consumer groups, like KEI that submitted comments: http://www.keionline.org/index.php?option=com_content&task=view&id=104


http://www.siliconvalley.com/news/ci_8680156?nclick_check=1

Justice Department approves XM-Sirius radio deal
Associated Press
Article Launched: 03/24/2008 12:29:18 PM PDT

WASHINGTON - The Justice Department on Monday approved Sirius
Satellite Radio Inc.'s proposed $5 billion buyout of rival XM
Satellite Radio Holdings Inc., saying the deal was unlikely to hurt
competition or consumers.

The transaction was approved without conditions, despite opposition
from consumer groups and an intense lobbying campaign by the land-
based radio industry.

The combination still requires approval from the Federal
Communications Commission, which prohibited a merger when it first
granted satellite radio operating licenses in 1997.

The Justice Department, in a statement explaining its decision, said
the combination of the companies won't hurt competition because the
companies are not competing today. Customers must buy equipment that
is exclusive to either XM or Sirius, and subscribers rarely switch
providers.

"People just don't do that," Assistant Attorney General Thomas Barnett
said in a conference call with reporters.

The government also appeared to endorse a central argument the
companies used in pushing for their merger: that ample competition is
provided by other forms of audio entertainment, including "high-
definition" radio, Internet-based radio stations and even devices like
Apple Inc.'s iPod.

"The likely evolution of technology in the future, including the
expected introduction in the next several years of mobile broadband
Internet devices, made it even more unlikely that the transaction
would harm consumers in the longer term," the Justice Department said.

The buyout received shareholder approval in November. The companies
said the merger will save hundreds of millions of dollars in operating
costs - savings that will ultimately benefit their customers. The
Justice Department also noted that argument in its approval.

The FCC had no comment on the decision Monday. In the past, FCC
Chairman Kevin Martin has said any approval faced a "high hurdle."

Martin said last week that agency staff was "drafting various options"
in preparation for a final recommendation. The five-member commission
could vote against the deal, approve it or approve it with conditions.
The agency could require the companies to freeze prices or make part
of their satellite spectrum available for public-interest obligations.

Both XM and Sirius declined to comment on the decision on Monday.

Sen. Herb Kohl, D-Wis., chairman of the Senate Judiciary Committee's
subcommittee on antitrust, said in a statement that the merger would
create a satellite radio monopoly and asked the FCC to block it.

"We are particularly disturbed by this decision, given the Justice
Department's record in recent years of failing to oppose numerous
mergers which reduced competition in key industries, resulting in the
Justice Department not bringing a single contested merger case in
nearly four years," he said.

The companies have pledged that the combined firm will offer listeners
more pricing options and greater choice and flexibility in the channel
lineups they receive. If the deal is approved, the companies have said
they would offer pricing plans ranging from $6.99 per month, for 50
channels offered by one service, up to $16.99 a month, where
subscribers would keep their existing service plus choose channels
offered by the other service.

Despite the consumer-friendly promises, most consumer groups have
opposed the proposed merger.

"If this is what our competition cops do, we might as well close shop
and save taxpayers a few hundred million dollars because they're not
doing their jobs," said Gene Kimmelman, the Washington lobbyist for
Consumers Union, nonprofit publisher of Consumer Reports magazine.

Shares of both companies rose following the news. XM Satellite shares
were up 15 percent in afternoon trading while Sirius was up 8.6 percent.


Judit Rius Sanjuan
Attorney at Knowledge Ecology International
www.keionline.org / www.cptech.org
Phone: +1.202.332.2670, x18
Email: judit.rius@keionline.org