Satellite Radio And Its Competitors

Friday, March 28, 2008

The Justice Department took a year to approve the merger of XM Satellite Radio and Sirius Satellite Radio, but it appears that Steven Pearlstein could have wrapped up the analysis in a day ["Out of Tune With Consumers," Business, March 26].

To Mr. Pearlstein, the providers of satellite radio have no effective competition from alternative sources such as traditional broadcast radio, iPods, the Internet, etc.

Why? Apparently, because they are technologically different and have different business plans. AM-FM and Internet radio, for example, "get their revenue from advertisers rather than listeners, so it's hard to see how they impose much pricing discipline on XM or Sirius." This view is apparently not shared by the broadcast industry, which lobbied hard to prevent the merger -- presumably because broadcasters saw a combined XM-Sirius as effective competition for the audiences that Mr. Pearlstein declared to be distinct from one another.



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