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Merger: Bad Idea, Then and Now

If a merger proceeds, maybe commercial radio groups should seek an immediate dramatic easing if not elimination of U.S. commercial ownership caps in each market. It’s no less ridiculous than this merger.

To allow a merger of Sirius and XM is, on balance, in the public interest. So says Kevin Martin says after due deliberation.

Both the FCC chairman and the U.S. Justice Department have a funny idea of the public interest.

The regulators are about to hand control of a piece of the spectrum larger than what all other U.S. commercial and public radio stations occupy — combined — to a single, multibillion-dollar corporation. How is the public interest served by doing that?

These regulators answer to the needs of millions of consumers and thousands of existing broadcast and new media businesses. The appointed officials occupy an artificially created, but still-necessary, role: that of spectrum traffic cop.

Now those road troopers are going to give a single, huge double tractor-trailer permission to career down the highway free of restrictions that apply to everyone else in the radio broadcast lane — in fact to do so in its own special lane.

If you accept the frequent argument that big U.S. commercial broadcasters often misuse their spectrum by not serving the public interest, convenience and necessity — a contentious point, but one that finds a more receptive ear on this page than at most radio trade publications — how does it make sense to hand control of a yet more massive piece of spectrum to one large business entity (which, by the way, will be run by managers who helped create the very world of modern commercial radio that so many people love to hate)?

I supported establishment of satellite radio against the wishes of many in radio as an appropriate exploration of new technologies and new competition in use of the spectrum. However, regulators who licensed those two services (over competing claims) also established a prerequisite that their merger must not be allowed; they did so for a reason.

Those commissioners weren’t idiots; they already knew our media marketplace was blossoming into many choices. Proliferation of more competition since then doesn’t make their original intention irrelevant.

The regulators established such a restriction, in my view, because to hand control over a huge piece of spectrum to one and only one company would be nothing more than a federal giveaway of massive scope that would not benefit consumers and would be patently unfair to other businesses already competing in the broadcast arena under longstanding federal guidelines.

No amount of twittering around the edges with a la carte programming or minority set-asides is going to change that fact.

(Another way to tell this is a bad idea: If satellite radio had never happened, and then someone were to propose today from scratch the idea of selling one company exclusive, for-profit access to a swatch of public spectrum as fat as everything occupied by all of FM and AM combined, there’s no way it would be approved. Flat out no way.)

As I write, it’s unclear whether the FCC will follow in Martin’s path, but it’s looking more and more that it will and that a merger will be approved.

In that case, if I were Clear Channel or CBS or even public radio, I’d be thinking very hard about how to put this new precedent to my own good use.

I’d call for an immediate, dramatic easing — if not elimination — of ownership caps in each market in light of the monumental change in how regulators are now administering their charge to regulate access to broadcast mass media channels in a way that serves the public’s interest.

I personally am not a fan of trends in commercial radio programming over the past 20 years; and I don’t think it would be good public policy to allow Clear Channel or anyone else to obtain dramatically more spectrum; yet to do so would be far less ridiculous on its face than a satellite monopoly.

(I’m not the only one thinking that way. David Rehr at NAB raised the point in a 2007 letter to Rep. John Conyers: “Could one company purchase every radio station in a market, or the entire country for that matter? Could Apple Inc. acquire a merged XM-Sirius?”)

If regulators, satellite investors and anti-NAB fanatics can convince our government to allow such a massive corporate handout, why shouldn’t Clear Channel take advantage of the same government largesse? Merger supporters: Be careful what you wish for.

Meantime, I repeat predictions I made a year or more ago. After XM and Sirius merge, you eventually will see higher prices for satellite content, far more paid advertising and fewer unique channels, with less consumer choice. You will get, in short, a company that reproduces the ills many people today attribute to bland corporate U.S. radio.

Even with such failings, though, I’d argue that XM and Sirius should be free to run their businesses as they see fit, as commercial radio is, and to fail if the marketplace so chooses.

But they should not be allowed to pursue it together as one company free of direct competition within a vast, protected portion of priceless spectrum highway.