Consumers Will Lose -- Or Gain -- From Sirius-XM Merger

Does the marriage of Howard Stern with his shock-jock archrivals Opie & Anthony constitute a "government bailout"? That's what the National Association of Broadcasters maintains, as it protests the planned merger of Sirius Satellite Radio with XM Satellite Radio. Two consumer advocates argued for and against the combination, on "Closing Bell."

Sherwin Siy serves as staff counsel for the Electronic Privacy Information Center. He said asking whether the merger is a "bailout" or not is irrelevant -- he insists that "the only question is: 'is this good for consumers?'" Siy sees a "good possibility" that it would be: He points to the "efficiencies gained" by such a deal, and says the broader market's technology -- including "HD radio, iPods" -- would grow stronger from the competition.

But Mark Cooper, director of research for the Consumer Federation of America, thinks Siy is "absolutely wrong." Cooper declared that consumers can only benefit from "head-to-head competition," not across categories. And he said that orbital radio is a "unique product": it's "national, mobile, unregulated" and "advertiser-free." Cooper says that "each product Siy mentioned" lacks the satellite broadcasters' advantages.
[Editor's note: Both XM and Sirius run ad spots on their talk-radio channels.]

Cooper notes that, despite being in the red for years, Sirius and XM "grew 40% last year, to $2 billion in revenues -- and there's only two of them." Addressing talk of a subscriber price ceiling being imposed by the FCC on a merged company, Cooper scoffed that "a price cap would last about 20 seconds."