Previous version incorrectly said that the public interest group Free Press supports conditions on the merger. Free Press has opposed the merger, even with conditions.
Justice Dept. Approves XM-Sirius Radio Merger
Tuesday, March 25, 2008
The Justice Department approved the merger of XM and Sirius yesterday, ruling that the union of the nation's two major satellite-radio services does not create an anti-competitive monopoly.
The decision eliminates what was viewed as the toughest legal hurdle facing the $13 billion deal, which must be approved by the Federal Communications Commission. Consumer groups and traditional broadcasters have urged the FCC to impose conditions on the merger.
Founded 11 years ago in the District, XM pioneered a market for paid radio. XM and Sirius were emblematic of the growth in media choice for consumers, as the market for online, cable and digital media players boomed. But the strength of other media caused stock prices for XM and Sirius to sag and created financial incentives for consolidation.
In explaining the decision, Justice officials said the options beyond satellite radio -- digital recordings, high-definition radio, Web radio -- mean that XM and Sirius could merge without diminishing competition.
"There are other alternatives out there," Assistant Attorney General Thomas O. Barnett said in a conference call. "We just simply found that the evidence didn't indicate that it would harm consumers."
The deal, which was proposed more than a year ago, has drawn criticism from 72 members of Congress.
"We believe the elimination of competition between XM and Sirius is contrary to antitrust law and the interests of consumers," Sen. Herb Kohl (D-Wis.), chairman of the Judiciary Committee's subcommittee on antitrust and consumer rights, said in a statement.
He cited "the Justice Department's record in recent years of failing to oppose numerous mergers, which reduced competition in key industries."
Kohl and others urged the FCC to block it.
The merger's most vocal industry critic was the broadcast industry.
"This is a monopoly, and unless they defy history, it will act like monopolies act," said Dennis Wharton, executive vice president of the National Association of Broadcasters, which had argued that local radio stations would not be able to compete nationally. "Without competition, they will raise prices, won't improve their technology and will limit their offerings."
The FCC declined to comment, but analysts said yesterday that the agency often follows the Justice Department's lead.