So much for the easy part. The Justice Department announced today that it would not seek to block the merger between satellite radio providers XM and Sirius. That leaves the deal's fate in the hands of the FCC, which has a decade-old rule prohibiting one company from owning both satellite-radio licenses. Opponents of media mergers will probably point to today's news as another instance of a Republican Justice Department giving short shrift to antitrust enforcement. To me, though, the decision was inescapable. I just can't see an antitrust problem here, no matter how many times the National Association of Broadcasters invites me to do the math.
In a succinct summation, the DOJ noted that there isn't real competition today between XM and Sirius within several key segments of the public. For example, many consumers' choice of satellite service is dictated by the exclusive deal that the manufacturer of their car struck with XM or Sirius. More important, the Justice Department's Antitrust Division found that satellite radio doesn't constitute a distinct market. XM and Sirius are just two of many competitors in the market for audio entertainment -- think terrestrial radio, MP3 players, podcasts and even online stations powered by wireless broadband. Although opponents argue that the deal would create a monopoly, the DOJ said that it would be a monopoly without teeth:
In the retail channel, where the parties likely would continue to compete to attract new subscribers absent the merger, the Division found that the evidence did not support defining a market limited to the two satellite radio firms that would exclude various alternative sources for audio entertainment, and similarly did not establish that the combined firm could profitably sustain an increased price to satellite radio consumers.
That's good news for the companies' merger plans, but not for their long-term survival. Then again, XM and Sirius haven't made their long-term prospects an issue for regulators, at least not officially. They're publicly traded companies, after all. They can hardly tell Wall Street to buy their stock while also telling Washington that they're doomed to fail without a merger.