Comments: Satellite Radio Monopoly

88 intentionally expanded its market to reach services not necessarilyproviding moreover, based on the current market providing for the above-referenced increase,' presuming no change in the terms of the sale of other products."93 44 first, satellite radio has to compete with "the most dominant form of competitive level.144 . . . . these are struggling companies that some folks say will not survive without a merger." id.; see the radio market.31 fcc imposed a condition on the merger whereby all interests connecting see supra note 179. states and would lead to a consolidation of media services, resulting in the arguments of the potential public interest harms unpersuasive, but there is is now portable like sirius and xm); see also darrin olson, visteon hd jump portable hd radio, corp., transferors, and echostar commc'ns corp., transferee, 17 f.c.c.r. 20,559, 20,562-63 52 furthermore, other indications that the merger will generate lower prices are competitive alternatives to satellite radio, and (3) a multitude of benefits to 46 services that provide for multiple accessibility options, including, but not and if it determines it sirius are no longer in competition against one another. therefore, unlike ($329.99), provides the most features.104 echostar-directtv merger, 17 f.c.c.r at 20,606 (quoting united states v. e.i. du pont see id. at 3-6. preliminary tabulation indicates that more than 96% of the shares voted were petition to deny, supra note 11, at 16. upon request" if it is shown that "[t]he underlying purpose of the rule(s) opposition, on the other hand, has been the nab. this is no surprise since these major transactions bear significant relevance to the proposed xm- the fcc granted sirius and xm these see generally id. at 5812-24. affected.40 compete with cable companies in that market. however, the dbs market is an radio access.142 radio was to "help assure sufficient continuing competition in the provision as to existing 36 to the anticompetitive effects of the transaction in puerto rico, being that id. at 5. 13 where he stated, "unlike internet 1. the public interest benefits outweigh potential harms bio, http://www.ftc.gov/os/sectiontwohearings/docs/070213baltobio.pdf (last visited june 21, 2008). the nab, in its opposition to internet radio, cites to testimony by david 90 therefore, satellite radio appears to be a therefore, if 6 this campaign's effort to keep consumers listening to second, the applicants argued that the transaction would allow argument was clearly undercut by the fact that echostar had filed an antitrust holdings inc., transferor, and sirius satellite radio inc., transferee, mb docket no. 07-57, at 14- the desirability of mp3 players is shown by the fact that "341 million mp3 players are id. see infra part iv.b.1 (discussing the doj's review of the proposed xm-sirius year from the date on which the fcc order was adopted.69 criticism."114 based radio, satellite radio can travel with [you] in the car, or on a hike, or on newsroom, radio reaches 232 million listeners per week, according to radar® 93, radio, which makes it similar to satellite radio, is that internet radio also potentially merged entity to ensure the public interest is not detrimentally the merger would be procompetitive because new echostar would be in a considered by consumers to be "an attractive alternative to satellite radio."85 audio entertainment and information."141 invested over $5 billion in an attempt to develop and market their products.4 satellite radio's monthly fee of $2.99 is equal to, if not less than, ssion and upon a finding by the commission that the public the merger was permitted, such fierce competition would be reduced, and the 152 this data seems to radio availability to previously underserved and unserved markets, diverse competes for listeners has significantly evolved in the past ten years and is see bestbuy.com, supra note 105. cations to viacom's infinitybroadcasting to entercom communications have online, http://xmro.xmradio.com/xstream/index.jsp (last visited june 21, 2008) (indicating that xm 63 be necessary in order for the two satellite radio companies to remain economically viable." paul r. little competition between such already existing subscribers. (liberty media) sought authority to transfer control of dbs licenses and liberty media and directv, xm and sirius are able to prove how and why 105 51 firms in the relevant communications markets" and on future competition.38 see id. at 11. competition in puerto rico, which would lead "to higher prices, lower in 2005, "[d]espite the price increase[s], the number of xm subscribers 2 the merged entity would increase prices or maintain prices at an anti- widescreen display, offers mp3 playback ability, and maintains around 109 since early 2002, the companies have been striving to enter and additional programming aimed at minority and other underserved because sirius and xm have already "engaged from advertisers as in the case of 'traditional' radio."). of high-power dbs service," id. at 20,616-17; (3) that the applicants' proposed "nationwide pricing dars licenses because it determined that more than one dars licensee was necessary 'to ensure reason, mp3 players are highly attractive and serve as competition to satellite stiletto 2, the doj indicated that internet radio on mobile phones is likely programming, which would lead to decreased local radio content and cause sound, data, and video."16 maintains the authority to impose and enforce certain conditions on the at the time of application, echostar and directv provided both the fcc has been actively reviewing the potential merger to devoting an estimated $28 million of their airtime to the promotion."113 106 ownership will be represented equally by former shareholders of xm and the clayton act, which prohibits mergers that are likely to substantially one-time fee of $15.00,100 the fcc determined that this antitrust suit undercut echostar's (2002) (quoting u.s. department of justice & federal trade commission, horizontal circumstances surrounding satellite radio, including where it is most therefore, if subscribers rarely switch between the two services, there is application of echostar commc'ns corp., general motors corp., and hughes elecs. 2008] satellite radio monopoly 425 quality service or both."66 117 see petition to deny of the national association of broadcasters, in re xm satellite radio 156 in opposition to the argument that satellite radio has to compete with suit against directv, proving that theywere in competition with one another merging of the engineering departments of xm and sirius will significantly see bestbuy.com, sirius­stiletto 2 portable satellite radio receiver, http://www.best http://www.fcc.gov/oet/spectrum (last visited june 21, 2008). "regulatory responsibility for the june 21, 2008). 178 and probably not an issue to most subscribers. the activation cost is a mere are currently twelve identical channels between sirius and xm, and another seventy-five channels in september of 2001, xm began its commercial operations and was limited to the other. instead, the merged satellite radio entitywould compete hd radio, the nab argues that "even with digital capabilities, local radio 107 directv-liberty media merger, 23 f.c.c.r. at 3286. 21 11 54 therefore, in order for this purpose to be 148 32 offers a "variety of niche programming . . . including such varied offerings as corp., transferee, 23 f.c.c.r. 3265, 3271 (2008); application of echostar commc'ns corp., directv-liberty media merger, 23 f.c.c.r. at 3334. program content, such as national sports programming, niche programming, results. after one downloads media, he or she can then put it on his or her portable mp3 players "can be connected to online music subscription state of sirius and xm. it proceeds by taking an in-depth look at the black's law dictionary 302 (8th ed. 2004) (emphasis added). car or via a portable device, it is still in direct competition with satellite 78 telecommunications mergers to determine whether they are likely to subsidiary of sirius, vernon merger corporation, will be merged with and hours of music,106 as satellite radio. realizing the detrimental financial conditions suffered by xm and sirius. an agreement whereby liberty media would become the largest stockholder 1. the echostar-directv merger not only is it completely portable xm and sirius did compete in the past to attract new subscribers, there was public notice, media bureau action sirius satellite radio inc. and xm satellite radio 22 that the public interest benefits outweigh the possible public interest harms. producers of sound recordings, 25 loy. l.a. ent. l. rev. 203, 205 (2005). stations will not be able to offer the hundreds of channels satellite radio can, audio entertainment," namely terrestrial radio.109 discussed. a reduction in local programming, harming local listeners.151 related statutes."41 which formulated a sought to merge, the fcc would have to waive that condition.21 merger guidelines §§ 1.11, 1.12 (apr. 2, 1992, revised apr. 8, 1997)). 113 however, since these lower-cost service tiers are likelyto 74% of those interviewed owned a cell phone and of that 74%, 31% listen on a portable device."97 relevant product market in which satellite radio competes is far broader another benefit of the merger is that it will offer "consumers access to petition to deny, supra note 11, at 16. buy.com/site/olspage.jsp?skuid=8545381&type=product&id=1188560189235 (last visited june 21, expanded non-english language programming, children's programming, and application, and because the fcc has the ability to impose conditions on the innovation and video services to consumers of directv.60 although internet radio is not as mobile as other forms of mobile however, the sirius stiletto 2 is not necessarily expensive because of these radio satellite service in the 2310-2360 mhz frequency band, 12 f.c.c.r. 5754, 5786 (1997)). will have no effect on competition in the market. in the echostar-directv 1. the doj's review jacobsmedia.com/articles/tech3_satellite.asp. competition with one another. 145 83 166 169 one another. it is important to note that such a reference is in regards to current competition, not douglas a. mcintyre & jon c. ogg, how sirius &xm would look as a merged company consolidated application, supra note 3, at 14-15. interest benefit, the fcc decided to approve the merger application.67 the public interest is served, more people will seek to purchase satellite radio communications commission, commission approves transaction between sirius satellite radio sirius and xm. the fcc concluded that the merger "is in the public interest." press release, supra entered the market 'the nab went on an all-out smear campaign to discredit the new technology because the decrease in media consolidation was a significant public breakbeat, old-time radio, soundtracks, and middle eastern."136 47 u.s.c. § 310(d) (2002). that, while the entities are separate companies, "[c]onsumers have only a be a lot of people (i.e., one-third of one million americans already listen to willing to pay a radio station for access to its airwaves" if listeners were not "[r]etail channel sales have dropped significantly since 2005," and it could charges $2.99 per month for internet radio access that is commercial free); live365--vip determine whether or not it serves the public interest. sirius and xm are expected to increase to approximately twelve million by 2010."122 press release, arbitron newsroom, satellite radio channels account for 3.4 percent of 126 native_or_pdf=pdf&id_document=6519546364 [hereinafter petition to deny]. 41 10,327, 10,327 (2007). yahoo.com/launchcast/subscription/default.asp (last visited june 21, 2008) (indicating that yahoo radio. such devices offer cd-quality music, unlimited access to the user's of the act, other applicable statutes, and the fcc's rules and policies.34 deficit of an estimated $2.4 billion in long-term debt.6 the proposed echostar-directv merger, the proposed xm-sirius merger of satellite dars service."74 jumped by 84 percent . . . and subscriber growth in the last three quarters of 159 interest are analogous: if the public interest is served, most likely share 176 in cd-like quality and has the ability to receive wireless data services into its person has the ability to utilize both radio services, however, does not mean 94 see supra note 138. see also digitally imported radio, http://www.di.fm/pro/signup/ directv merger and should be approved. directv in puerto rico and lcpr would have to be severed within one lastly, the applicants claimed that the merger would allow new echostar to sirius and the other to xm.20 id. at 38. (quoting request for rule 56(f) continuance to respond to directv defendants' programming, ranging from: music, sports, news, talk, entertainment, traffic, sirius satellite radio inc. (sirius) and xm satellite radio holdings inc. 47 u.s.c. § 151 (1996). 182 64 therefore, because the public interest benefits are so compelling in this "the common engineering standards and protocols which would come from originally applied for sdars licenses, only four companies remained at the time of the fcc id. at 20,573, 20,587. be partially financed by advertising,153 http://wireless.fcc.gov/auctions/default.htm?job=releases_auction&id=15&page=o. consumers want both services, they "will be able to do so on a single device what other internet radio providers charge for access to their services.139 id. jaime schopflin & tom neumayr, apple teams up with ford, general motors &mazda advertisers"117 nor will they offer the nationwide scope of satellite radio."123 devises that provide internet accessibility from multiple locations. 124 the directv-liberty media merger. a possible condition of the merger, for and offering approximately three hundred channels of significantly diverse 116 as predicted, on july 28, 2008, the fcc voted to approve the proposed merger between id. 446 delaware journal of corporate law [vol. 33 in making this assessment, the fcc must also orbitcast.com, john dvorak: let them merge, will you?, orbitcast, dec. 11, 2007, there is one significant difference: xm and fcc.59 "substantially lessen competition" in the relevant marketplace.76 therefore, since satellite radio and in innovation, program quality, and diversity; and (3) detriment to local radio this argument is not necessarily true. press release, supra note 77, at 2. 112 subscriber subscribed to each service independently. see comcast triple play, http://www.com in re amendment of the commission's rules with regard to the establishment and 43 164 430 delaware journal of corporate law [vol. 33 interested in baseball would most likely subscribe to xm, while another id. connected to a person's car stereo. in 2007, more than 70% of u.s. in the directv-liberty media merger, news corporation (news additionally, permitting the merger will allow such programming to compete with the rest of the radio market.3 to have certain channels blocked out--an option which is not currently will not likely lessen competition in the marketplace in which satellite radio 438 delaware journal of corporate law [vol. 33 179 ability, and records up to one hundred hours of satellite radio music.105 therefore, the two really"do not provide high-speed internet access service across the country in a more consolidated application, supra note 3, at 3-6. decision is thus a significant contribution to this comment and must be licenses on the condition that the two companies would not merge; if they "copy of press release xm shareholder vote to approve agreement with sirius, filed by xm 20 anticompetitive, it is distinctly different from the proposed echostar- unlike id. at 3294. $12.95.101 press release, supra note 77, at 2. corp., hughes elecs. corp., transferors, and echostar commc'ns corp., transferee, at 37, cs see sirius internet radio, http://www.sirius.com/siriusinternetradio (last visited there is no violation, the fcc must then determine whether the proposed highly differentiated interests and tastes."86 lastly, because the relevant product market in which sirius and xm compete is not this would make mobile phones a potential uncommitted 40 although the antitrust division of the department of that are not currently available on either company's system, including which satellite radio competes was limited to just satellite radio or if this consolidated application, supra note 3, at i. sirius and xm obtained these licenses in response to states.2 if home.96 limited to only sirius and xm because each offers a variety of different and 81 in head-to-head competition for the right to distribute their products and signal to provide the user with extra information, such as song titles, news, then why would terrestrial radio spend $28 million of their airtime on such 123 hdtv manufacturers to exclude echostar from the hdtv market, (4) paid professional sports interest would be served thereby. even after dars licenses for significantly less than the current price of $25.90" per month.163 id. at 207-08. to exist in the near future, people are not likely to switch between services holdings inc. and xm satellite radio holdings inc. subject to conditions (july28, 2008), available authorizations from news corp. to libertymedia.56 137 "06/18/2007" press release) (noting that "radio reached 232 million listeners"). directv merger.43 97 competition between sirius and xm in important segments, (2) plenty of of various forms of traditional, online and satellite media. from january 17 to february 18, 2007, moreover, as to new subscribers, there tends to be two primary accelerated technology such as interoperable receivers, and operational terrestrial radio was not competing for the same listeners as satellite radio, called for a separation transaction whereby hughes would separate from general motors id. at 20,622. in this antitrust suit, echostar alleged that directv: "(1) signed exclusive since 1997, the fcc has made decisions on over fifty major signal provider's income comes from listeners, who pay a fee to access the station's signal, and not general motors corp., and hughes elecs. corp., transferors, and echostar commc'ns corp., iii. the public interest analysis 173 listener to act as his or her own disc jockey.137 strong enough competitor in puerto rico to prevent lcpr and directv echostar-directv merger, 17 f.c.c.r. at 20,574. in the end, however, the fcc decided to grant only two licenses: one to the largest ten radio operators posted revenue of $9 billion and billions in positive cash flow." elimination of competition in the relevant product market, id. 20,603; (2) barriers to prevent new hd radio)124 licenses into one, claiming as benefits the ability to eliminate overlapping programming and creating to remedy harms that arise from the transaction . . . and that are reasonably 89 see news corp. and the directv group, inc., transferors, and liberty media corp., justice (doj) "reviews telecommunications mergers pursuant to section 7 of lower prices for monthly subscriptions, more diverse programming, overlap in their channel lineups, a merger will allow them to consolidate this unavailable to terrestrial broadcasters[,] . . . the merged entity would have public interest harms against the potential public interest benefits. first, the lessen competition," the fcc's analysis goes slightly further by taking into 56 actually competing against one another. see generally application of echostar commc'ns corp., 2008/02/group-wants-to.html ("[s]ome analysts say that sirius and xm may not survive even in in addition to defining the relevant product market, it is essential to through a computer connected to the internet.134 from other sources, and therefore can charge subscribers less per month. seconds in length while those written by a second party average 204.6 seconds."). therefore first, the nab argues that if xm and sirius are permitted to merge, in regards to offering more programming, sirius alone currentlyoffers (home, automobile, and independently roaming), but it offers wi-fi 42 29 18 encompasses the entire range of electromagnetic frequencies transmitting radio.130 15 92 via the internet and the ability to install their satellite radios in homes, ltd. (lcpr) would all be controlled by john malone if the merger was including malone, [sat] on liberty global's ten person board of directors."63 digital audio radio."70 101 114 services through each car company," sole-source contracts exist with all radio would still be the dominant figure in the mobile audio entertainment in addition, the argument that sirius and xm will be able to drive not an anticompetitive monopoly, and bears no desire to seek out "unique and innovative content" would be eliminated.149 now extremely competitive."75 consolidated application, supra note 3, at 10. directv/nab_petition020402.pdf. of significant importance to the fcc's analysis was the fact that interest benefits. first, the applicants indicated that because news corp. the merged entitycould "use revenues 143 c. discussion of the potential public interest harms national advertising rates . . . which would allow [it] to drive down see ray torres, should i buy a satellite radio?, http://ezinearticles.com/?should-i-buy- banded together to create 30-second spots featuring such stars as avril xm-sirius merger, this section will outline the purported public interest d. balancing potential public interest harms and benefits id. pandora, allow users to create their own internet radio stations," enabling the 102 while xm offers 170 channels.166 as previously indicated, the doj's antitrust division reviews satellite radio monopoly in 1997, the fcc accepted bids for sdars licenses and six com- consolidated application, supra note 3, at 29. private corporations § 6672.20 (perm. ed., rev. vol. 2007). "the radio spectrum is the radio audio entertainment services, since it cannot yet be directly accessed in the id. that would prefer quality over quantity. moreover, some quid pro quo, and similar pricing in equipment, it appears that price is not a abstract advertising revenue to local radio stations, which would consequentlylead to additional subscribers,7 3.75 minutes, then simple math indicates that 1,750 songs, at 3.75 minutes per song, provides options. rather, it is comparable to the 8gb ipod touch, which is also the doj determined that the operating a total of seven satellites, serving over 13.6 million subscribers, their device with the tracks they want. for some, this may be more desirable home stereo and theater systems, alarm clocks, computers, and continuing competition in the provision of satellite dars advanced technology sooner than would otherwise occur."170 innovation, program quality, and diversity.147 17, 27-33 (filed july 9, 2007), available at http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi? major automobile manufacturers through 2012 or beyond, leaving no more dars auction to commence, http://library.findlaw.com/1997/mar/1/129996.html ("on april 1, 69 determine whether the merger proposal complies with the relevant provisions that are commercial free and of higher sound quality than basic internet services so as not to block out opportunities for terrestrial and internet radio. the nab argues that satellite radio does not see petition to deny, supra note 11, at 27-33. id. at 27. 17 more niche programming, being better positioned to compete with the rest of the market, and not month to have service from both sirius and xm.161 157 a satellite radio is the fact that the programing [sic] is actually commercial free. this is because of the act, the fcc must determine department of justice, the federal trade commission and private practice." ftc.gov, david balto: 55 scenario whereby a blocked merger could cause xm and sirius to go broke); eliot van buskirk, 440 delaware journal of corporate law [vol. 33 corporation (gm) by means of a split-off. id. a-satellite-radio?&id=1048773 (last visited june 21, 2008) ("among the great advantages of using believes earnings will increase if the public interest is served. basenese believes earnings will not id. at 33. the communications act of 1934 (the act),14 appropriate submarket of the mvpd market for antitrust purposes. the fcc has the power "to establish general 12 second, the public interest benefits of the proposed merger will 58 another benefit of internet 14 91 consolidated application, supra note 3, at 26. industry. as a result of this deficit, on february 19, 2007, sirius and xm projected to . . . [be] sold in the united states by" 2009. consolidated application, supra note 3, at mp3 players do offer preprogrammed material since users must program their car's stereo system."129 xm (nov. 13, 2007), available at http://www.fcc.gov/transaction/xm-sirius.html (follow "copyof they are essentially a quid pro quo: subscribers pay fees and satellite radio that they previously would not have had the option of receiving prior to the 175 most likely, these costs are not an issue for subscribers because hd radio was originally developed to improve terrestrial radio the radio market. "[b]y some estimates, almost one-third of one million arbitron conducted a study in which "1,855 people were interviewed to investigate americans' use completely portable, allows for wi-fi connectivity, features a multicolor entity would increase prices and reduce innovation, program quality, and and although new providers may then-current dbs spectrum into a single company.53 to deliver seamless ipod integration, apple, aug. 3, 2006, http://www.apple.com/pr/library the market participants in direct competition with satellite radio include: entertainment industries.58 and local-market radio audiences across the united states; surveying the retail, media and product malone was the chairman of the board of libertyglobal, which directv.45 d01, available at http://www.washingtonpost.com/wp-dyn/content/article/2006/12/07/ar2006 dealing contracts with electronics retailers, (2) organized a group boycott . . . (3) conspired with sufficient to undermine an inference of competitive harm."92 to deny of national association of broadcasters, in re echostar commc'ns corp., general motors 115 owned lcpr, and "four members of liberty media's board of directors, listeners in the united states, satellite radio only accounts for roughly 14 attachment_key=-126018 (noting that xm began its operations in september 2001 and sirius in that satellite radio requires costs incurred with buying the receiver and b. the competitive analysis second, the nab argues that the merger would likely reduce id. market sports packages and national news and entertainment sources that are 1. terrestrial radio this comment examines the proposed merger agreement between 45 department of justice in its review of the xm-sirius merger. rather, the press release, filed by sirius satellite radio inc." link) (discussing vote by sirius shareholders); 14 william meade fletcher et al., fletcher cyclopedia of the law of plenty of competition available to rival satellite radio and a clear indication program choices. although the public interest harms analysis utilizes a 2005 inquiry should be determining what the public wants--since this is a "public therefore, this section will finalize the analysis by weighing the potential in the form of commercials, and since advertisers want their sirius and xm 423 holdings inc. seek approval to transfer control of fcc authorizations and licenses, 22 f.c.c.r. directv merger on its face,173 into xm, with xm being the surviving entity of this subsidiary merger."8 the fcc must determine whether the proposal to transfer control will serve it subscribers 130 channels,165 services."18 despite their efforts, however, "sirius and xm confront high built-in costs id. product market included other services.84 79 radio (i.e., ipods and other mp3 players). furthermore, it should be noted national sample of arbitron's fall 2006 survey diarykeepers." id. at 2. factor that necessarily needs to be considered. for the purposes of this 50 room for competition between the two companies in acquiring new press release, supra note 77, at 4. 2008] satellite radio monopoly 437 never any competition with existing subscribers and competition as to new educational programming.47 sarah mcbride, terrestrial-radio firms get serious; operators, long dismissive of pursuant to section 310(d)32 company offered its subscribers the ability to access streaming audio content 2. the fcc's competitive analysis between them for customers who have already subscribed to one or the other over what satellite radio and traditional terrestrial radio offer. this fact alone 2008] satellite radio monopoly 443 because the computer allows the listener to decide what type of radio quality moreover, liberty media, directv, and libertycablevision of puerto rico, redundant programming, "freeing capacity for even more diverse offerings parties--people who listen to the radio--it is evident that they must be in service would continue to be important in the future.83 decided to raise its prices from $9.99 per month to $12.95 per month, the mcintyre & ogg, supra note 6 (noting that sirius has approximately $1.1 billion in long- plan" was not likely to be an effective remedy to the competitive harms because "national pricing" services,"127 2008] satellite radio monopoly 431 this dominance can be reflected by "its ongoing economic clout; for example, in 2005, 103 an important part of the fcc's public interest analysis is its (xm). it begins by examining the origin of satellite radio and the current directv had over five hundred identical channels of programming.48 environment.'" id. at 20,598 (quoting establishment of the rules and policies for the digital audio additionally, xm decided to include a channel that was previously costing 48 companies spending millions of dollars to acquire exclusive rights to unique devastating and leaves minimal options available for the companies to benefits would improve "the overall current efficiency of use of the dbs profitably impose at least a 'small but significant and non-transitory price 47 u.s.c. § 310(d) (2002). competition policy and consumer rights. see id. at 13 n.38. david a. balto "is an antitrust lawyer liberty media, as the majority shareholder of directv, to promote greater http://www.orbitcast.com/archives/john-dvorak-let-them-merge-will-you.html (noting a possible petition to deny, supra note 11, at 33. media merger, it should approve the xm-sirius merger. moreover, unlike without a merger. this would leave no satellite radio providers in the united 3. mp3 players broadcasters that terrestrial radio views itself as a competitive force against populations."168 a combined effort will accelerate the involvement of third party manufac- seth sutel, xm raises satellite radio prices, usa today, feb. 28, 2005, available at efficiencies.13 this number is consolidated application, supra note 3, at 5. id. at 12. 434 delaware journal of corporate law [vol. 33 id. at 31-32. prices. application of echostar commc'ns corp., general motors corp., and hughes elecs. harms as perceived by the nab, but then balance those harms by corp.), the directv group inc. (directv), and libertymedia corporation radio views itself in competition with satellite radio. still be prevalent after such a transfer of control. sirius and xm argue that would divest all interests in directv, the transaction would eliminate this corp., transferor, and echostar commc'ns corp., transferee, 17 f.c.c.r. 20,559, 20,605-06 this almost one-fourth (23%) tune in during at-work hours, while 12% id. at 20,561. there was another component to this proposed transaction that was furthermore, two of the biggest factors considered should be the fact that the 146 applies that analysis to the current proposed merger. this comment shows interest" analysis. on november 13, 2007, sirius and xm, individually, press release, supra note 77, at 2. connectivity, a multicolor liquid crystal display screen, mp3 playback media merger. 2008] satellite radio monopoly 447 territory," the fcc determined that the proposed transaction could reduce 149 companies are permitted to merge, subscribers would then have the option of id. at 13. id. a. the relevant product market 118 approximately 109 hours of music (1,750 songs multiplied by 3.75 minutes per song equals 6562.5; 132 6. therefore, similar to the reason that the fcc approved the directv-liberty iv. the public interest analysis consolidated application, supra note 3, at 28. id. at 32. 65 more limited in the future than it was in the past."79 press release, statement of the department of justice antitrust division on its decision to analogous to how the directv-liberty media merger eliminated in opposition to the argument that satellite radio competes with despite their efforts, however, sirius and xm are still facing a combined id. at 20,561. million listeners.110 47 at the time of application, echostar and gandossy, supra note 5. 100 programming, improvement of "u.s. competitiveness in the world id. at 3274-75. the only efficiency released in the doj's statement was variable cost non-duplicative use of the spectrum."49 comm. on energy and commerce, 110th cong. 133 (2007) (testimony of mel karmazin, chief in this respect, id. 1 range anywhere from $19.99 to $329.99, depending on the purchaser's 161 establishment of dars rules, supra note 70, at 5823. quality internet radio for $4.95 to $6.95 per month); launchcast plus radio, http://music. example, could require that the combined xm-sirius entity sever some of note 1, at 1. consolidated application, supra note 3, at 31. in washington, d.c. and has practiced antitrust law for over 20 years in the antitrust division of the the radio industry, these third parties are those that listen to the radio. why? furthermore, it is evident from the actions of major terrestrial radio therefore, consumers only sept. 15, 2007, at c2 (indicating satellite radio has approximately 14 million subscribers); arbitron due compete against one other, was the antitrust suit echostar had filed against $1.3 billion in long-term debt and sirius has about $1.1 billion). guidelines of operations and to grant licenses for use of the spectrum, which 60 sirius satellite radio inc. (sirius) and xm satellite radio holdings this comment supports this proposition. around the country, organized a spot campaign earlier this year that singled 33. sirius and xm should be permitted to merge. not only are the critical (revision), 24/7 wall st., feb. 19, 2007, http://www.247wallst.com/2007/02/how_sirius_ 158 digital platforms 22 (2007), http://www.arbitron.com/downloads/digital_radio_study_2007.pdf. a product's relevant market is one that, if the product were to increase in 128 47 c.f.r. § 1.925(a), (b)(3)(i) (2006). in february of 2002, sirius does the doj. id. 72 lavigne and ludacris talking up local radio . . . . the companies are the potential public interest benefits, and indicate how the benefits clearly more, "[s]everal internet radio services, including yahoo! launchcast and define the market participants. market participants include firms that 130 weather, emergency, and informational data services.24 &id=1186004962130 (last visited june 21, 2008). if the average song is 224.85 seconds long, or (being that there are better deals, more channels, and other benefits as and fcc rules and policies was their claim that they did not compete against one another.174 in fact, in 2005, when xm id. at 20,562. peted to attract new subscribers, there has never been significant competition 121 (last visited june 21, 2008). 23 129 in regards to versatility, versatile listening service. since its primary uses are in the vehicle and at not dispute that there is an mvpd market and that both echostar and directv combined form, as the internet reaches into more homes and cars. a market without satellite radio while internet radio is currently not portable like the ipod or sirius revoke licenses to operate stations . . . ."). campaigns? although the majority of these campaign advertisements do not touch 8gb mp3 player, http://www.bestbuy.com/site/olspage.jsp?skuid=8500437&type=product advertising rates" to the detriment of local radio stations.154 internet radio is preferred by many because it is typically accessed transactions regarding proposed mergers.42 see echostar-directv merger, 17 f.c.c.r. at 20,574. id. 35 [1997,] the fcc will commence the auction of two licenses to provide digital audio radio service conducted by arbitron, mobile phones were listed as "the next frontier for 5 press release, xm satellite radio holdings inc., xm shareholders vote to approve agreement in puerto rico, the only three competitors were directv, lcpr, and and thus offer more niche programming, including foreign language and even if the fcc had any hesitation as to whether or not to grant the id. at 3334. electromagnetic spectrum.15 this alternative is attractive the national association of broadcasters (nab) disputes the 174 if, however, the merger is denied, the individual companies competitive market.98 first, the doj determined that, "[a]lthough the firms in the past com- consumers will have the option of selecting from different packages of this comment disagrees with the nab's conclusion and supports the therefore, only reason it did so was because it wanted to match sirius's price.157 consideration other public interest concerns.37 press release, sirius satellite radio inc., sirius stockholders approve merger with 119 providers in the united states) would be merged with new echostar (the for the foregoing reasons, this comment stands for the proposition that 3 26 62 139 satellite services, start their own promotional blitz, wall st. j., jan. 11, 2005, at b4. 108 control to xm of the two sdars licenses will serve the "public interest, currently participate in the relevant market and "uncommitted entrants"-- not subject to the limitations of local broadcasting (allowing mp3 players to the parties entered into this occurs the doj determined that the merger would enable the new entity whether sirius and xm have demonstrated that the proposed transfer of la monica, bad reception for sirius and xm, cnn, mar. 26, 2007, http://money.cnn.com/ 2008] satellite radio monopoly 439 id. at 3. information technology, market their services, and attract subscribers.26 indicates that shareholders will believe their share price will go up, which is com/getsirius/plans (last visited june 21, 2008). the relevant market for this case is not the mvpd market, but rather a submarket spectrum," the proposed merger was still anticompetitive, and therefore, in customers."87 merger, it could ease such qualms by instituting conditions, just as it did in (last visited june 21, 2008) (indicating that digitally imported offers commercial free, higher sound balance those potential public interest harms against any potential public than satellite radio since the listener gets to be his or her own disc jockeyand satellite radio services, or as broad as the entire audio/video entertainment therefore, mp3 players essentially offer the services such as internet radio on mobile devices, which are likely all radio listening in fall 2006 arbitron survey (feb. 27, 2007), http://www.arbitron.com (follow id. at 20,564, 20,567-68. and have yet to turn profits."5 9 an underlying purpose of the rules and policies for the digital audio forthcoming.140 radio.121 therefore, they claimed that permitting the merger would essentially id. at 5823 (emphasis added). gandossy, supra note 5. motion for summary judgment and memorandum of law in support thereof at 7-8, echostar 25 59 each company has invested over $5 billion to develop and upgrade other major dbs provider) and continue operations under the name cnn, sept. 4, 2007, http://www.cnn.com/2007/tech/09/03/satellite.radio/index.html; see also panies submitted applications to become the first satellite radio providers.19 id. at 3279. indicating the fcc's rule on transferring of licenses.71 consolidated application, supra note 3, at 24. consolidation (which benefits the public), it did not find sufficient evidence insinuating an average song length of 224.85, the median between the two. id. appear to be the closest substitutes for other current or potential id. at 20,573. 2007/03/26/news/companies/sirius_xm/index.htm. in fact, richard dorfman, a managing director subscribers, the doj found that, since no interoperable radios that enable this comment concludes that the proposed merger transaction does seeking alpha, june 17, 2008, http://seekingalpha.com/article/81595-fcc-chairman-considers- the doj's b. market participants http://blogs.pcworld.com/digitalworld/archives/2007/01/visteon_intros_1.html (stating that hd radio media consolidation, the xm-sirius merger will have the same effect. if xm 77 tuning into that radio station.118 antitrust suit against one another, nor are there any recent significant satellites, served over 7.6 million subscribers, and provided 170 channels to its subscribers. id. at 5- subsequently installing it, that is not necessarily true. just like terrestrial activation cost and monthly subscription costs. although some may argue de nemours & co., 351 u.s. 377, 395 (1956)). if the two that they are in competition with one another. competition is defined as id. contract with xm, as does howard stern with sirius; therefore, one the nab supports its argument by the fact that, in the 136 inc. (xm) are currently the only two satellite radio providers in the united prices will increase because "share prices follow earnings."181 new board of directors, selected by both sirius and xm, and its equity merger, unless they subscribed to both services for $25.90 per month.167 mention satellite radio, some do: "entercom, which owns 105 stations just because a press release, arbitron newsroom, supra note 12. 53 june 21, 2008) (indicating that sirius charges $2.99 per month for internet-only access); xm radio limited ability to tailor their service, such as the ability to request that certain 87 the likely public interest benefits; second, an analogy will be drawn between see consolidated application for authority to transfer control, in re xm satellite radio "[t]he struggle for commercial advantage; the effort or action of two or more "the modern market for audio entertainment services in which satellite radio audio radio services (dars) [or (sdars)]."17 this comment argues that two of 104 directv.54 timely and effective manner than if the merger was denied.51 ii. the origin of satellite radio and not necessarily competing against the cable providers.175 merger will be discussed. better position to compete with cable operators that offer bundled services.50 therefore, if the transaction was approved, two of the three satellite radio as a whole competes with the other various forms of the radio therefore, it appears that the relevant product market includes music 27 foreclosure of the satellite radio market.177 xm_w.html (claiming that "sirius has almost $1.1 billion in long-term debt," and xm over $1.3 channels in which they receive their satellite radio service: car manufacturers by december 31, 2006, the companies were and essentially compete. moreover, although not necessarily live material, between 9 khz and 275 ghz have been allocated." id. consolidated application, supra note 3, at 15. 133 balto from a senate judiciary hearing,132 id. at 3332. competes.77 not violate the act, other applicable statutes, or the fcc's rules and policies. shareholders have voted and clearly support the proposed merger, and so in that application, echostar communications corpo- since the fcc's analysis is xm's and sirius's exclusive deals with national news and entertainment and one to xm). close its investigation of xm satellite radio holdings inc.'s merger with sirius satellite radio inc., served by waiving the rule and allowing one company to control both 99 436 delaware journal of corporate law [vol. 33 with other sources including: terrestrial radio, hd radio, mp3 players, and automobiles were estimated to offer ipod integration, "making it easy for consolidated application, supra note 3, at 12. economies of scale," allowing these savings to the companies to implicate a id. id. at 20,586, 20,595, 20,598. as analogous to this 100% ownership, the fcc referenced songs of choice, versatility, and portability.126 2008] satellite radio monopoly 445 gramming, customers of both companies will be able to access programming from "profitably increasing prices or reducing service quality in lcpr's the radio remains largely an in-car medium. approximately three-fourth (73%) transferee, 23 f.c.c.r. 3265, 3266 (2008). commc'ns corp. v. directv entm't corp., no. 00-k-212 (d. colo. nov. 6, 2000)). service.72 considering that satellite radio encompasses a mere 3.4% of the entire radio market.12 satellite radio holdings inc." link) (discussing vote by xm shareholders). franklin, supra note 119, at 211. be listened to anywhere the listener desires, just like satellite radio). for this 444 delaware journal of corporate law [vol. 33 consumers that would likely result from the proposed merger.78 see jacobs, supra note 96. f.c.c.r. at 20,574. telephone interviews were conducted with respondents age 12 and older chosen at random from a sirius paid more than $83 million, and xm paid nearly $90 million. id. at 2, 4. see also danoff, subscribers is currently substantially limited.176 www.xmradio.com/xstream/index.jsp (showing advantages and prices of xm radio online) (last echostar.64 see press release, supra note 77, at 4. the fcc decided to set rather, the fcc term debt and sirius about $3 million less). auction, including: sirius, xm, primosphere limited partnership, and digital satellite broadcasting 162 diversity.11 power to "waive specific requirements of the rules on its own motion or exclusive programming which "reflects an effort to attract consumers with their networks, design adequate radio receivers, subsidize costs, develop outweigh the harms. this notion is then further substantiated by terrestrial radio, the nab argues that since "'satellite radio subscribers are 120701750.html (stating neither sirius nor xm have turned a profit). see id. at 11. the fcc determined that approving the application was not in the argues that "competition between xm and sirius has been fierce, with the 73 fails to realize, however, is that hd radio is offering superior sound quality proposed merger, and by acknowledging that the shareholders of sirius and id. joel d. corriero furthermore, since sirius and xm already have "exclusive deals for out-of- it is highly attractive because it offers traditional broadcasts at http://hraunfoss.fcc.gov/edocs_public/ attachmatch/doc-284108a1.pdf. id. membership, https://store.live365.com/orders/orderform-listen.live (last visited june 21, 2008) to make this determination, it is important to look at the the nab's petition enumerated various public interest harms, id. on december 31, 2006, sirius operated three satellites, served over 6 million sub- first, it is likely that the merger will lead to lower prices and greater people may not want the broad range of content offered bysatellite radio, but through all major automobile manufacturers.99 market, according to a study conducted by arbitron.111 442 delaware journal of corporate law [vol. 33 xm have both voted in favor of the proposed merger.1 service in the 2310-2360 mhz frequency band, 12 f.c.c.r. 5754 (1997), available at $7.95 per month). article, this product market will be referred to as "mobile audio entertainment would not be served or would be frustrated by . . . the instant case, and that a 2008] satellite radio monopoly 435 this is a clear benefit in opposition to the argument that satellite radio competes with mp3 as applied to the proposed xm-sirius merger id. at 3. a. compliance with the communications act noted in part iii.b; and finally, the shareholders' opinion of the proposed include the proposed echostar-directv merger and the directv-liberty merger if it so desires, the fcc should approve the proposed merger.182 id. at 2. on how or why the transaction would lead to greater innovation.61 177 38 radio competition,159 prices.91 consolidated application, supra note 3, at 6. subscribers who get their services through the purchase of a new will serve the public interest. although it may be argued that this only february 2002) [hereinafter consolidated application]. discussed in this comment), which increases earnings and essentially share violation of the fcc's rules and policies because it concentrated 100% of the fred jacobs, tech survey iii: satellite radio findings, mar. 20, 2007, http://www. 131 and monthly subscription costs are currently 151 in fact, sirius and xm have each see consolidated application, supra note 3, at 10-20. lastly, hd radio is not just a fad; it is consistently growing within compete against any other form of audio entertainment, and therefore, a frequently listened to and its cost in relation to other services. "satellite see sirius satellite radio, terms and conditions, http://www.sirius.com/serviceterms and must pay the combined payment of $25.90 per 49 on march 20, 2007, sirius and xm submitted 138 as part of the merger, directv holdings llc (directv) (a according to this study, nearly furthermore, the doj found that the relevant product market could not be why? because, the nab major broadcasters" and has opposed satellite radio since its inception into broadcast satellite (dbs), to echostar (creating what shall be known as new versa). than satellite radio in the strictest sense. moreover, this comment will merger would not be in the best interest of the public because the merged petition to deny, supra note 11, at 33. sirius-xm-merger-in-the-public-interest (discussing an opinion that investors should not invest in the id. at 3, 5. furthermore, each 67 a. standard of review 8 because of the costs incurred in purchasing the additional equipment.80 ownership and, therefore, reduce media consolidation--a concern of the therefore, satellite radio and mp3 players really do offer similar services automobile.82 id. entertainment service product market because it is offered as a service in id. a common example of bundled services would be the "comcast triple play," which 171 are complementary rather than substitutable services."115 benefits. first, the applicants claimed that by allowing the merger they 2008] satellite radio monopoly 433 what the nab choosing from around three hundred different channels (prior to anyoverlap 147 satellite radio, leading to less diverse programming for the consumers.150 see id. at 3271-72. franklin, supra note 119, at 212. the fcc will decide the proposed xm-sirius merger. these transactions be able to "step into the shoes" of xm and sirius, they may not want to, applications to the fcc seeking consent for the proposed merger.30 interest benefits.35 of the 232 million radio 33 suggest that competition is not only prevalent, but extremely favorable to 34 danoff, supra note 2, at 750; see also paul, hastings, janofsky & walker llp, satellite and sirius continue to operate without turning a profit they may not survive 7 aipla q.j. 399, 419 (2006). public interest harm. instead, such action appears to create a public interest arbitron internet broadcast services, the infinite dial 2007: radio's [ipod] users to enjoy and control their ipod's high-quality sound through audience and marketing information data." about arbitron, http://www.arbitron.com (last visited 163 term debt and xm about $1.3 billion); see also kirkham, supra note 5 (stating that xm has about radio spectrum is divided between the federal communications commission and the national instead, the companies face a combined see aurele danoff, "raised eyebrows" over satellite radio: has pacifica met its match?, second, the doj analyzed whether the relevant product market in mp3 players, specificallyipods, are in fierce competition with satellite that overlap according to their genre, which indicates a substantial amount of similar content. id. some analysts believe that, because neither xm nor sirius is profitable, "a merger might entrants into the market, such as the limited amount of spectrum available for the same satellite 71 increasing subscriptions, that study does not necessarily indicate that after subsidiary of sirius, vernon merger corporation, will be merged with and different experience than radio.131 consolidated application, supra note 3, at 6. la carte basis, and to develop tiered service offerings to offer a lower-cost "reasonably interchangeable in pricing, use and qualit[y] . . . ."94 127 2. the directv-liberty media merger id. at 30. chris kirkham, sirius sees benefits in potential merger with xm, wash. post, dec. 8, 2006, at petition to deny, supra note 11, at 27. the same periods of the prior year."146 428 delaware journal of corporate law [vol. 33 stephen labaton, f.c.c. chief questioning radio deal, n.y. times, mar. 7, 2007, at application of echostar commc'ns corp., general motors corp., and hughes elecs. "the past, the number of subscribers did not diminish when prices increased.145 video and audio programming and internet access services.46 see generally sirius satellite radio, subscription plans and options, http://www.sirius. if anything, such a price increase was actually the result of direct satellite aside from comparing the harms and the benefits, the most important $2.4 billion in long-term debt.27 viously discussed in part iv.b.2, there is overwhelming evidence that internet radio. calling the merger a "monopoly" is incorrect, especially 96 153 id. at 3283-84. 168 therefore, 2008] satellite radio monopoly 427 the doj reached this decision because it found: (1) a lack of . . . .'"). and services."172 schron.html (last visited june 21, 2008). "newsroom" hyperlink; then search "search archives" for "02/27/2007" press release). arbitron is introducing the public interest benefits in the next section. frequency (rf) portion of the electromagnetic spectrum." fcc radio spectrum homepage, hd radio is specifically in the mobile audio with richard alan inc., stated, "there's no benefit for the government to not let the deal go through at such a high percentage of votes in favor of the 109 constance robinson, mergers and acquisitions, 1602 pli/corp 185, 194 (2007). future of radio: hearing before the subcomm. on telecomm's and the internet of the house would be able to eliminate overlapping programming in the dbs spectrum reflection on how the merged entity will act. analogizing previous fcc orders in relation to the current xm-sirius 448 delaware journal of corporate law [vol. 33 with sirius (nov. 14, 2007), available at http://www.fcc.gov/transaction/xm-sirius.html (follow listener to record the media that is streamed.135 licenses, competition in the market in which satellite radio competes must mike caggeso, fcc chairman considers sirius-xm merger "in the public interest," id. see, e.g., news corp. and the directv group, inc., transferors, and liberty media be subject to rule 25.118, which prohibits transfers or 181 not say with any certainty whether this channel of acquiring satellite radio mp3 player and use that device in his or her car, on a hike, or on the beach. stations and their listeners.143 see fcc.gov, major transaction decisions, http://www.fcc.gov/transaction/mergerorder "[t]he nab is a full-service trade association that protects the interests of 39 i. introduction 167 an international media and marketing research firm whose "core businesses are measuring network 2. comparing the xm-sirius merger to previously proposed mergers 19 adam cain, satellite radio: an innovative technology's path through the fcc and into (indicating that live365 offers commercial free, higher sound quality internet radio for $4.95 to in that may only occur if the two companies are permitted to merge. which is predominantly listened to in the car,128 57 155 on january 18, 1995, the fcc allocated "the 160 telecommunications and information administration." id. "currently, only frequency bands 165 34 pepp. l. rev. 743, 750-51 (2006) (noting that the fcc granted only two licenses: one to sirius home, to be considered a competitor that is reasonably interchangeable, through an auction in which they collectively paid more than $170 million to the u.s. treasury; see generally best buy, http://www.bestbuy.com (last visited june 21, 2008); circuit holdings inc., transferor, and sirius satellite radio inc., transferee, mb docket no. 07-57, at 3, 5 echostar-directv merger, 17 f.c.c.r. at 20,622. that satellite radio has also provided the opportunityfor its listeners to access at 1 (mar. 24, 2008), available at http://www.usdoj.gov/atr/public/press_releases/2008/231467.pdf. the doj stated that "[t]hese efficiencies alone . . . would be purported public interest harms will be discredited byweighing them against services." that hd has gone portable and new devices can be transported from the car to the home and vice 37 charges $2.99 per month for internet-only access during a six month trial period). . . . via satellite."); leslie stimson, primosphere wants back in satellite game, sept. 12, 2007, approved.62 merger for several reasons. first, the merger will not create a monopoly id. at 19. lastly, as to mass-market retailers, the doj found that 2005 (i.e., following the price increase) was significantly higher than during id. at 2314. these lower rates, local radio stations would be forced to reduce their local 170 see infra part iv.d.2 indicates that xm and sirius are not actually in competition with http://www.arbitron.com (follow "newsroom" hyperlink; then search "search archives" for interested in howard stern would most likely subscribe to sirius.88 cast.com/tripleplay (last visited june 21, 2008). the companies stated that "[t]he surviving entity [would] be controlled by a petition to deny, supra note 11, at 14 (quoting the digital future of the u.s.: part 2-- control of the other remaining satellite dars license. this society?, 21 harv. j.l. & tech. 233, 260 (2007) (indicating that amongst "the most popular songs group wants to block sirius/xm merger, feb. 20, 2008, http://blog.wired.com/music/ 150 the doj's antitrust division reviewed the proposed xm-sirius merger to 4 this rule, however, is not necessarily binding. the fcc maintains the and create a monopoly."10 echostar-directv merger, 17 f.c.c.r. at 20,623. other concerns of the fcc were: (1) scott franklin, what is so b-a-d about d.a.b.? how high definition radio affects the those likely to enter the relevant market within one year.108 therefore, it reasons that if channels be blocked,"160 city, http://www.circuitcity.com (last visited june 21, 2008). consolidated application, supra note 3, at 27. increase). although lou basenese, an m&a expert, gives an opinion contrary to the argument of 2008] satellite radio monopoly 429 125 on billboard magazine's year end charts, songs composed by their performers average 245.1 divide the total by 60, to indicate hours, and you get 109.375). see shourin sen, the denial of a competitors would be commonly controlled.65 including: (1) increases in the price of satellite radio service; (2) a reduction id. echostar specifically stated: subscribers $1.99 extra per month to the basic service package.158 competitive analysis.36 press release, supra note 77, at 3-4. commercial interests to obtain the same business from third parties."116 of pre-programmed or live material as satellite dars" and provide a see generally establishment of the rules and policies for the digital audio radio satellite 76 consolidated application, supra note 3, at 27. 28 v. conclusion 426 delaware journal of corporate law [vol. 33 the fcc states: all at a cost of $299.99.107 transaction, the satellite radio shareholders clearly believe that this merger echostar-directv merger, 17 f.c.c.r at 20,573, 20,587. would surely be more restricted than a market that contained it."). billion); see also kirkham, supra note 5 (explaining that xm has approximately$1.3 billion in long- between sirius satellite radio inc. and xm satellite radio holdings inc. see press release, federal power to grant or withhold permits for the construction of stations, and to grant, deny, modify, or the merger the same result will happen.156 id. at 3269-70. comments sirius prior to the merger."29 to: "consolidate development, . . . eliminate duplicative costs, and realize on march 3, 1997, the fcc released its "rules and policies for the out satellite radio -- in particular, reception problems and cost -- for marketplace," and posed no "significant adverse impact on existing radio sirius and xm proposed a merger agreement to the scribers and provided 130 channels to its subscribers. id. at 2-3. similarly, xm operated four public interest.52 afterwards, however, federal communications commission's (fcc) public interest analysis and does not mean "low pricing," id. at 20,626-27; and (4) inadequate support in the record for the congressional mandate that grants the fcc the authority to regulate the id. at 28. this comment was accepted for publication prior to the fcc's approval of the merger b. practical applications of the public interest analysis transferee, 17 f.c.c.r. 20,559 (2002); consolidated application, supra note 3. this number is just 3.4% of the terrestrial radio's 2. hd radio 84 grant of the requested waiver would be in the public interest . . . ."73 16 in support of the merger, the applicants claimed several public interest market. moreover, as indicated in part iv.b.1, the doj found that although "promote the commission's long-standing policy in favor of efficient and sirius merger, and an analysis of the fcc's orders may give insight into how 3. shareholders' opinion another service must also offer at least these two options. moreover, the fact regulation of new digital audio radio services, 10 f.c.c.r. 2310, 2310 (1995). visited june 21, 2008). a beach."133 merger are likely to combat any concerns regarding an increase in price.89 prohibition on transfer of control will help assure sufficient we note that dars licensees, like other satellite licensees, will because echostar was not a it must be determined what products or services are "reasonably see, e.g., cathy lu, visteon intros portable hd radio, pcworld, jan. 22, 2007, id. at 3. echostar and directv, however, xm and sirius have never filed an lastly, the nab argues that the merger could result in a loss of consolidation). moreover, since sirius and xm have exclusive pro- commercials to be heard by listeners, "there would be few, if any, advertisers docket no. 01-348 (filed feb. 4, 2002), available at http://www.fcc.gov/transaction/echostar- /2006/aug/03ipod.html. study to demonstrate that xm and sirius have raised prices in the past while offers subscribers cable, phone, and high-speed internet services for lower rates than if the consolidated application, supra note 3, at 51-52. heavy listeners to radio in general,' . . . terrestrial radio and satellite dars lastly, the fcc is not obligated to completely strike down a proposed she will have to pay for a receiver and installation costs. receiver costs can their transaction will lead to greater innovation. as noted in part iv.d.1, the entrant in the mobile audio entertainment market. in fact, in a 2007 study mp3 players, however, are the source that allows downloaded 424 delaware journal of corporate law [vol. 33 of the mvpd market known as the high power dbs market . . . . echostar does 180 proposed merger and the end result was more than supportive.179 providers provide commercial free music.102 americans already listen to hd radio on a weekly basis, and this number is id. understandably the biggest advocates for the fcc's approval. the biggest directv-liberty media merger, 23 f.c.c.r. at 3283. corp.). 135 therefore, since the automobiles, boats, aircrafts, and even portable radios.25 id. he or she wants by updating the sound card, speakers, etc., and allows the products for which a hypothetical monopoly provider of the products would are granted, one licensee will not be permitted to acquire see generally sirius satellite radio, the internet never sounded so good, radio. xm and sirius both offer internet-only subscriptions to their services proves that hd radio competes with satellite radio because there appears to (filed mar. 20, 2007), available at http://svartifoss2.fcc.gov/servlet/ib.page.fetchattachment? proposed potential public interest benefits, id. at 20,663-64. see directv-liberty media merger, 23 f.c.c.r. at 3271; echostar-directv merger, 17 10 radio.138 74 liberty media was engaged in the video, media, communications, and will be forced to maintain redundant channels "in order to retain and attract merger could result in any public interest harms; and, subsequently, it must 86 the first to step into the satellite radio industry.22 144 id. have "pledged to unbundle their program offerings to offer programs on an à the definition could provide for a relevant product market as narrow as just assignments of licenses except upon application to the commi- time of application, directv offered satellite television services while discuss "rules for auctioning dars licenses," which includes a subsection cast in favor of the transaction" by sirius shareholders, and 99.8% by xm 122 balance the potential public interest harms of the proposed merger against transferee, 23 f.c.c.r. 3265, 3278 (2008). best of both worlds: they offer superior sound quality, like hd radio, and are http://www.sirius.com/siriusinternetradio (listing sirius options and prices for internet access) (last if related to the [fcc's] responsibilities under the communications act and terrestrial radio and away from satellite radio demonstrates that terrestrial terrestrial radio. therefore, even if xm and sirius were to merge, terrestrial satellite radio via the internet, thereby making internet radio within its relevant product market was not limited to satellite radio, but included other 85 benefit because the merged entity will have the ability to generate revenue for example, major league baseball has an exclusive 2008] satellite radio monopoly 441 broadcasting.119 id. at 20,623. see id. 134 eric a. taub, the future for xm, with or without a sirius merger, n.y. times, promote the development of devices and services.178 media from internet radio, and the internet in general, to achieve the same transferee, 17 f.c.c.r. 20,559, 20,574 (2002) [hereinafter echostar-directv merger]. although the fcc agreed that the transaction would decrease media its granting of the satellite dars licenses to xm and sirius, and said that it "provided for two that satellite radio is now portable should be an indication that it has began offering its services.23 visited june 21, 2008); xm radio online, listen online--connect to the best of xm, http:// section g of this order was specificallydelegated to 140 become more diverse. since the two companies currently have significant 66 82 95 from its higher-priced premium service offerings to cross-subsidize its one of the biggest factors the fcc took into account, specifically in corp., transferors, and echostar commc'ns corp., transferee, 17 f.c.c.r. 20,559, 20,612 (2002). shareholders.180 http://www.rwonline.com/pages/s.0052/t.8415.html (indicating that of the six companies that 2008). although the xm-sirius merger looks similar to the echostar- 120 merger). 172 price, buyers would switch to the other product or a product that is id. at 28. news corp. and the directv group, inc., transferors, and liberty media corp., the combined company will likely provide customers a credit if they choose proposed merger, contending that "the merger would eliminate competition service" and competition for new subscribers appears to be "substantially http://www.usatoday.com/money/media/2005-02-28-xm_x.htm. and mass-market retailers.81 satellite radio. "major radio companies from clear channel communi- however, the fcc has noted that "it will impose conditions only broader, it not only focuses on whether the proposed merger will reduce turers and technology partners in developing and offering innovative devices mp3 players can also be of these two major transactions, the fcc only denied the echostar- limited to: automobile use, at-home use, at-work use, portable use, and those id. at 14. in support of the merger, the applicants claimed two primary public make the above-referenced inquiry and determined that the proposed merger the relevant product market is "the smallest group of competing 31 the proposed xm-sirius merger and other previously proposed mergers, as and traffic warnings.120 id. at 3. in an effort to reduce costs, diversify their programming, and attract if 70 432 delaware journal of corporate law [vol. 33 merged xm-sirius entity because share prices follow earnings, and most likely earnings will not existing competition, but also on its effect on "the market power of dominant 61 aside this part of the spectrum because allocation of sdars was in the the sirius stiletto 2, being on the more expensive side since this comment supports the proposed down advertising rates by cross-subsidizing does not actually prove to be a indications of competition between the two companies. instead, as pre- partially true, that is not the only belief. essentially, share prices and public 141 slipperybrick, apr. 23, 2007, http://www.slipperybrick.com/2007/04/visteon-hd-jump/ (noting ration (echostar) and hughes electronics corporation (hughes) sought because "a radio station typically generates its revenue by selling airtime to lastly, the doj determined that the efficiencies of the proposed consolidated application, supra note 3, at 12-13. regarding channel redundancy, there directv and lcpr are in direct competition but commonly owned,68 players, the nab argues that such devices "do not offer the kind of variety channels for less than the previous standard of $12.95 per month.162 into xm, with xm being the surviving entity of this subsidiary merger."28 80 supra note 2, at 750-51. radio, which is preinstalled in most cars, satellite radio is now offered indicated that they were "very/somewhat" interested in a cell phone with survive. even greater market power," and could force such providers to deal onlywith chain reaction, thereby passing savings to consumers in the form of lower choose whatever songs he or she likes best. terrestrial radio are both trying to obtain business from the same third allowed their shareholders to vote on whether or not they agreed with the the future, 25 j. nat'l ass'n admin. l. judges 223, 236 (2005) ("when satellite radio first that the proposed merger is not anticompetitive, as supported by the 75 111 have to pay activation and subscription costs, which are both relatively low 30 see id. authority to transfer certain fcc licenses and authorizations, including direct 2310-2360 mhz band [of the radio broadcast spectrum] for satellite digital intended to occur prior to the proposed echostar ­directv merger. id. at 20,569. the application at the c1. see directv-liberty media merger, 23 f.c.c.r. at 3277-78. although the fcc acknowledged that the aforementioned response to an argument by echostar and directv that they did not really petition to deny, supra note 11, at 17 n.54. taylor gandossy, proposed satellite radio merger: boom for consumers or monopoly?, merger just because it finds public interest harms.39 (2002). further- 110 christopher s. reed, a trade dress approach to the protection of radio bans, 34 danoff, supra note 2, at 748; see also fletcher, supra note 15 ("the [fcc] has the essentially anything else that can play music. in fact, just like satellite radio, video services offered by echostar and directv, and no additional "slots available for the provision and directv's argument that their main competitor was cable and not each id. 142 if a consumer is installing a satellite radio in an older car, then he or id. echostar).44 desired features.103 id. at 2-3. wholly-owned subsidiary of hughes and also one of two major dbs the "public interest, convenience, and necessity";9 competitive rates, diversity of programming voices, and other benefits of a competitive dars patterns of local-market consumers; and providing application software used for analyzing media of directv, and news corp. would divest all interests in directv.57 because, after the merger, their engineering organizations will also merge.171 merger, one of the biggest flaws the fcc found in the applicants' argument federal communications commission (fcc) in which "a wholly owned does, the fcc may grant the merger. therefore, savings.90 directv-liberty media merger, 23 f.c.c.r. at 3278. outweigh any public interest harms. these public interest benefits include: interchangeable by consumers for the same purposes"95 leagues to refuse to accept echostar's bids, and (5) falsely disparaged echostar's products." petition terrestrial radio, hd radio, mp3 players, and internet radio/mobile phones. market.112 executive officer, sirius satellite radio)). these proposed mergers have multiple similarities: seeking to combine two satellite id. point of entry."152 receive the service in a vehicle, while more than four in ten (44%) listen at 93 4. internet radio/mobile phones 98 general performance right in sound recordings: a policy that facilitates our democratic civil increase, regardless of the merger, because the companies have so much debt. see id. general motors corp., and hughes elecs. corp., transferors, and echostar commc'ns corp., 2008] satellite radio monopoly 449 satellite radio requires subscribers to pay two types of costs: an convenience, and necessity."33 24 the hearing was before the senate judiciary committee subcommittee on antitrust, 68 entered into a merger agreement which indicated that "a wholly owned other.55 competition which took place in the early years of satellite radio. unified regulatory system for the radio broadcasting industry, is the according to bestbuy.com, the device holds 1,750 songs. see bestbuy.com, apple­ipod broadcasters and local listeners to suffer.155 . . . and exclusive music artists and series."148 this comment, he still supports the proposition that share prices follow earnings. this comment proposed xm-sirius merger has been labeled by the doj as not id. customers."169 automobiles, in the home, and has portable capabilities similar to satellite would prefer the hd radio appeal of local news and programming.125 second, the applicants asserted that 154 subscribers to listen to both sirius and xm currentlyexist, nor are theylikely available.164 public interest. it offered benefits such as: cd-quality audio programming,