The NAB and other opponents of the Sirius-XM satellite merger contend that satellite radio constitutes a separate market for purposes of competitive analysis. Under this theory, the Sirius-XM merger can be charaterized, as former FTC Chairman Jim Miller did yesterday in a Washington Times piece, as "a two-down-to-one merger." Case closed if you define the market in such a narrow, static fashion.
In my essay published on CNET a couple of weeks ago, I explained why, especially in light of the dynamism in the communications marktplace, the relevant market for purposes of assessing the competitive impact of the proposed Sirius-XM merger ought not to be the narrow satellite radio market, but rather a broader audio information and communications marketplace. I won't repeat that here.
In his Washington Times piece, Miller asks: Would the "threat of switching to broadcast radio or listening an iPod really restrain the merged company from raising its prices?" I fail to understand why Miller and other merger opponents presume that America's satellite radio subscribers are so peculiar as to be immune to the effect of price hikes in the face of substitutes. And it is on this question of substitutes that a smallish item in today's Communications Daily [subscription required] caught my eye. The item reports that a new study sponsored by Sony indicates that one in three Britons listens to radio via the Internet. The study indicates "that new technology is changing listening habits." According to Sony's UK Managing Director: "Internet radio is no longer the preserve of technology enthusiasts. This research shows that it is hugely popular among millions of people from a wide range of ages."
Now Miller does not mention Internet radio as an alternative to satellite. But why not? Are the English really that different from us? I know they are peculiar in some ways. They still have a queen, for instance. But even if we suppose on this side of the pond Americans are not presently tuning in to Internet radio at quite the same one-in-three rate as the Brits, to me, it is fanciful to ignore the impact of Internet radio. And absent fundamental changes in the laws of economics, not to mention human nature, it is fanciful to think that a price hike by satellite radio would have no impact on the habits of audio consumers.