FCC TO CHANGE RULES, ALLOW COMPETITION IN CABLE TV FOR APARTMENT DWELLERS

From The New York Times:

The Federal Communications Commission, hoping to reduce the rising costs of cable television, is preparing to strike down thousands of contracts this week that gave individual cable companies exclusive rights to provide service to an apartment building, the agency’s chairman says.

Commission officials and consumer groups said the new rule could significantly lower cable prices for millions of subscribers who live in apartment buildings and have had no choice in selecting a company for paid television. Government and private studies show that when a second cable company enters a market, prices can drop as much as 30 percent.

“Exclusive contracts have been one of the most significant barriers to competition,” Kevin J. Martin, chairman of the commission, said in an interview. Cable prices have risen “about 93 percent in the last 10 years,” he said. “This is a way to introduce additional competition, which will result in lower prices and greater innovation.”

XM AND SIRIUS SATELLITE RADIO TO MERGE?

On Tuesday the rumors that had swirled for more than a year regarding a possible merger between the two satellite radio companies in the United States, XM and Sirius Satellite Radio, were confirmed when both companies announced they are interested in a "merger of equals". There will be numerous hurdles to overcome before the companies can merge.

1. The Federal Communications Commission will have to approve the merger. They will take into consideration what is in the best interest of the public and if they do green light the merger, they might require concessions such as being able to regulate satellite radio like the currently do with terrestrial radio and requiring XM and Sirius to give back some of the radio spectrum issued to them by the FCC.
2. The Federal Trade Commission's Bureau of Competition seeks to prevent business practices that restrain trade. They get their charge and power from the FTC Act and Clayton Act, both of 1914. If the Bureau of Competition determines that consumers could lose in a scenario in which there was only one provider of satellite radio, the merger would likely not be approved.
3. The Antitrust Division of the Department of Justice will look closely at the proposed merger, consulting with the FTC to streamline the process and avoid duplication. If the DOJ believes that the merger would be a violation of the Sherman Antitrust Act of 1890 and/or the Clayton Act of 1914, the merger would likely not be approved.

Going from two competing satellite radio companies to one merged company seems to violate antitrust laws - one provider of a good or service that lacks a viable substitute - but XM and Sirius will argue that they do have competitors and substitutes in terrestrial radio, internet radio, and iPods and other portable music devices including mobile phones.

Most proposed mergers take a few months to clear all of the hurdles, but this one will likely take much longer, possibly going into 2008 before a final decision is rendered.

WSJ.com
USA Today

SIRIUS & XM SATELLITE RADIO CONSIDERING MERGER?

According to The Wall Street Journal, rivals Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. seem to be considering a merger, but any combination of the only satellite radio providers would face serious legal and regulatory antitrust hurdles from the Justice Department Antitrust Division, the Federal Trade Commission and the Federal Communications Commission. According to Reuters, FCC Chairman Kevin Martin today said, "There's a prohibition on one entity owning both of those licenses," making a merger seem unlikely, but he did leave the door open by saying that the FCC would review any transaction submitted to it.

While Sirius and XM are the only satellite radio providers in the United States, they might be able to get over most antitrust and competition hurdles by arguing that satellite radio competes with traditional terrestrial radio, MP3s, Internet radio, and even cellphones.

While both Sirius and XM have added millions of users, totalling more than 12 million, neither has approached profitability. In the past 12 months, Sirius stock price has fallen more than 35% while XM has dropped more than 40%.