Sirius-XM Merger Would Send Wrong Signal

In fact, XM and Sirius really offer two services. One is music programming. The other is the delivery of that programming via satellites and ground stations. Most of their customers buy the package, but not all. I get limited XM service as part of my DirecTV subscription, and in the future one can imagine cellphone operators and cable companies and maybe even old-fashioned radio stations contracting with XM or Sirius for programming. A merger would reduce their choice of suppliers.

In the same way, XM and Sirius are engaged in furious bidding wars to get different auto companies to install their systems as standard features and options. Obviously, that kind of competition will disappear after a merger -- in fact, the companies say explicitly that would be a benefit of the merger. At the same time, it works to the detriment of car buyers.

As for consumer choice, the companies argue that by eliminating duplicative folk channels and '80s rock channels, the merger will give them the money and bandwidth to launch even more specialty channels. Of course, we have no assurances of that. And as anyone with 500 channels of cable knows, there is a diminishing return to that kind of "variety." My hunch is that music lovers would be better off if XM and Sirius continued to compete by providing the best and most innovative jazz channels, for example, than offering me only one jazz channel along with another specializing in East European folk dances.

Moreover, you can bet your Gilbert Arenas game jersey that XM-Sirius would try to use its new clout and financial resources to outbid competitors for the exclusive audio rights to major sporting events, including those of your local teams.

XM and Sirius are correct when they argue that we are about to enjoy a competitive free-for-all among various companies and technologies to determine which is the most effective in bringing digital music to consumers. It is a process that will foster innovation and greatly benefit consumers. But for precisely that reason, this is the wrong time to give one technology a leg up in that competition by allowing it to become a monopoly, while other companies are forced to compete on two fronts -- against other companies using the same technology, and against companies using different technologies. By approving the XM-Sirius merger, the government would be stacking the deck in favor of satellite radio.

Moreover, history suggests that one or two of the technologies will eventually prevail by proving itself more effective and efficient. And if one of the survivors is satellite radio, consumers will find themselves worse off because the government had allowed a monopoly.

What we have here, folks, is a case of two money-losing companies locked in what has become ruinous competition, from which they hope to escape by merging. It may be that, given the economics of the business, there is room for only one to survive and prosper. But if satellite radio is such a "natural monopoly," consumers will be better off if the companies are forced to duke it out until one prevails and the other dies. The antitrust laws were designed to foster competition, not to foreclose it by bailing out competitors that overpaid for talent, over-invested in plant and equipment or over-promised results to their investors.

Steven Pearlstein can be reached atpearlsteins@washpost.com.