LRV Study: Sirius/XM Merger Unlike Echostar/Directv

June 22, 2007


Washington - Jun 21, 2007 - The League of Rural Voters (LRV) released an analysis to show differences between the direct broadcast satellite (DBS) market in the 2002 Echostar/Directv attempt to merge and the audio entertainment market in the proposed Sirius/XM merger. LRV supports the proposed merger between the satcasters.

The main point of the analysis is that satellite radio is only one small piece in a broad market of audio media choices. LRV Executive Director Niel Ritchie said, "Rural consumers have an array of audio entertainment choices today and will continue to do so after the SIRIUS-XM merger."

The analysis states that during the DBS merger proposal, the FCC determined that there were at most two DBS providers. Parallels between the DBS merger and the sat radio merger have been drawn, but according to the LRV report, "the Commission's review of the proposed merger of Directv and Echostar in 2002 provides no guidance to the analysis applicable here." It further adds, "...this is because the product markets at issue in the two transactions are fundamentally different."

The analysis, Sirius/XM vs. Echostar/Directv: A Fundamentally Different Merger for Rural Consumers, was filed in support of the satcaster's application with the FCC on June 21.

The main points of the analysis:
Distinct Market Definitions

  • In 2002, the FCC defined each local market as the two DBS providers and the local cable monopoly. The analysis compares this to the "broad and competitive audio entertainment market in which satellite radio competes."
  • LRV consider the market to include terrestrial radio, Internet radio, MP3 players, CD players and mobile phones.
  • In 2002, the FCC found there were significant barriers to entry in the DBS merger, but that "this concern is moot in the satellite radio market, given the multitude of other competitors that have already entered the field and the anticipated release of future competitors such as HD Radio and the Apple Iphone.

Different Impacts on Rural Consumers

  • A DBS merger would have forced a monopoly in areas where there was no cable. The audio entertainment market does not present the same concern, since it includes many different providers/editors.
  • LRV's analysis concludes that the FCC's concerns in the Echostar/Directv case do not apply to satellite radio because of its small saturation in a rapidly growing market.

The complete report can be accessed at siriusmerger.com and xmmerger.com.


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