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July 9, 2007
Dennis Wharton
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NAB Files Petition to Deny XM/Sirius Merger

WASHINGTON, DC – NAB today filed at the FCC a petition to deny the proposed merger-to-monopoly of XM and Sirius Satellite Radio. Following is an excerpt from the Executive Summary of NAB's filing.

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The National Association of Broadcasters ("NAB"), by its attorneys, hereby files this Petition to Deny the above-captioned application. The nation's only two satellite digital audio radio service ("satellite DARS") providers - XM Satellite Radio Holdings Inc. ("XM") and Sirius Satellite Radio Inc. ("Sirius") - seek to merge into a satellite DARS monopoly. The Commission should reject the proposed merger for the reasons set forth below.

This is a simple and straightforward case. A decade ago, the Commission established satellite DARS as a distinct, "continuous nationwide" service that "local radio inherently cannot provide." To ensure that consumers benefited from competition in the satellite DARS market, the Commission implemented a duopoly market structure and insisted that the two licensees have no interest in each other and "prohibit[ed]" them from ever merging. It took these actions at the insistence of Sirius, who argued that such limitations were necessary to (1) "preserve intra-service competition and overall DARS diversity of programming" and (2) to prevent a "DARS monopoly."

XM and Sirius now urge the Commission to abandon this carefully crafted competitive satellite DARS regulatory regime. No longer satisfied with a duopoly, which Sirius Chief Executive Officer ("CEO") Mel Karmazin has referred to as a "second best" market structure, XM and Sirius now seek to merge, consistent with Mr. Karmazin's vision that "[i]t would be great if there was a monopoly. . . ." While Mr. Karmazin may be correct that a monopoly would be "great" for the companies, this is not a valid reason for the Commission to reverse the explicit prohibition against a monopoly in satellite radio or ignore the harmful effects that the merger would have for American consumers.

The Commission should not countenance this assault on competition. The Commission stood firm in favor of competition over monopoly the last time the only two licensees in a spectrum-based service sought to merge - rejecting the proposed direct broadcast satellite ("DBS") merger of EchoStar and DirecTV - and should do so again here. Indeed, the case for denying the instant merger application is even more compelling than in the EchoStar/DirecTV case.

The Commission has said repeatedly that a threshold question in a merger case is whether the proposed merger would violate a Commission rule or policy. The proposed merger of XM and Sirius would violate the satellite DARS anti-merger rule, long-standing Commission policies against spectrum monopolies, and the pro-competitive vision enshrined in the Telecommunications Act of 1996.

The proposed merger would create a monopoly in the national satellite DARS market, which would inevitably result in increased prices, fewer programming choices, less local programming for radio listeners, and other public interest harms. The Applicants, however, have not even come close to meeting their burden of demonstrating by a preponderance of the evidence that there are "extraordinarily large, cognizable, and non-speculative efficiencies" that justify the creation of a monopoly. The Applicants also admit that a merger is not necessary for the future success of either company. In short, the Commission lacks any evidence sufficient to support a conclusion that the proposed merger would serve the public interest, convenience and necessity.

While some will undoubtedly argue that the Commission could craft conditions to offset the anti-competitive harms that would flow from approving the merger, no such conditions would be sufficient. Temporary price caps or other forms of regulatory intervention would be illusory and contrary to the pro-competitive vision of Congress and the Commission. Moreover, there is no reason to believe that the merged entity could be relied upon to comply with any such regulatory conditions, given each company's past history of substantial rule violations.

Accordingly, the Commission should summarily dismiss the application as violative of the satellite DARS anti-merger rule. In the alternative, the Commission should designate the application for hearing to determine whether grant of the application would serve "the public interest, convenience, and necessity."

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About NAB
The National Association of Broadcasters is a trade association that advocates on behalf of more than 8,300 free, local radio and television stations and also broadcast networks before Congress, the Federal Communications Commission and the Courts. Information about NAB can be found at


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