The latest news in the proposed Sirius-XM merger is too similar to recent demands to be anything other than caving to someone’s rent-seeking, so only a quick summary is necessary:
FCC commissioner Jonathan Adelstein, a Democrat, wants the companies to cap prices for six years and make one-quarter of their satellite capacity available for public interest and minority programming, among other conditions.
If the companies agree, Adelstein told the AP that he will support the deal.
Let’s ignore the death reality the merged company would face if it agrees to cap prices for six years and the government continues to contribute mightily to inflation. Why bother with concerns that expenses for the company could increase substantially in six years? Forget¹ that. And let’s also ignore how the influence is being peddled here to benefit Adelstein. It’s offensive, but I do not care more now than my already high libertarian frustration with our unnecessary, unwise regulatory scheme. Hopefully his vote won’t be necessary because two commissioners have already announced support, with a third, Deborah Taylor Tate, expected to support the merger. (She, like the commissioners who’ve decided to vote “Yes”, is a Republican.) Instead, I’m more cynically amused by Adelstein’s concern:
“It’s critical that if we’re going to allow a monopoly, that we put in adequate consumer protections and make sure they’re enforced,” Adelstein said.
The government dictated the existing market when it determined exactly two companies would offer satellite radio services. It is irrational to now complain about unacceptable market conditions. If we humor Adelstein’s fears, a duopoly is hardly better than a monopoly, yet years of experience have shown that satellite radio is not able to price itself as it pleases, or offer limited entertainment choices as a cost-saving measure. Customers began flocking to Sirius when Howard Stern joined the company. I suspect they will flee when he retires. The range of entertainment choices is too large. The executives of Sirius and XM know this, so they seek to stay competitive with a merger. The members of Congress and the FCC are the only people under the delusion that the merged company will gain monopoly power.
Adelstein has an interesting, if unsurprising, solution:
Adelstein also wants to set up an enforcement regime to make sure the companies adhere to the conditions, something that was not outlined in the previous voluntary offer.
So it’s not okay for a merged Sirius-XM to have (the perception of) monopoly power, but it’s necessary for a new regime to have monopoly power to enforce the FCC’s limitations. A government enforcement regime would be benevolent in ways that Sirius-XM would be inherently incapable of acting. Obviously. Would a central planner mislead you?
When the companies announced their proposed merger in February 2007, I’d hoped they could complete the merger in time for me to receive part of the 2008 baseball season on Sirius. I’m now doubting I’ll experience any of the 2009 season on Sirius. I will not thank the FCC for its awful effort at looking after my interests as a consumer.
¹ <cynicism>Obama won’t let that happen!</cynicism>