Media Watch

On that Tuesday morning so filled with hope, I pulled myself out of bed earlier than usual and shuffled down the hall in my professional journalist attire, the cats pattering after me. Like millions around the world, I turned on my computer with a sense of nervous anticipation. The day before, with the markets closed, satellite-radio services XM and Sirius announced a long-rumored plan to merge. Surely my 350 shares of Sirius – estimated retirement account value, $1,308 – would soar with the news, reaping riches upon all those, like myself, who were shrewd enough to predict the winds of commerce.

But a funny thing happened on the way to the Lexus dealership. After bumping up 10%, Sirius' stock sunk back to premerger wallow.

Wall Street was sending a clear signal that investors are still not convinced that XM and Sirius will come together to form a space supergroup, sort of like Journey and ABBA joining to rule the world. The deal still must be approved by the righteous bureaucrats of the Federal Communications Commission – the same whip-smart public servants who wrestled with the evil of Janet Jackson's exposed nipple – and trying to predict their actions on antitrust issues is akin to betting on rigged cockfights.

This is no small matter to the 14 million people currently forking over their hard-earned dollars for the services, which offer channels devoted to Howard Stern, Oprah, NPR, NASCAR, and a hundred varieties of news and music. The merger is the rare business transaction that unites Emo's beer-nut fanatics and Wall Street brokers in a shared dialogue, as well as people like me, who are too cheap to actually pay for satellite service but invested in the companies under the assumption that people love the service; ergo the stock must be great. (It turns out "ergo" is Latin for, "Or maybe not, dumbass.")

The antitrust debate sets up a Battle Royale of corporate scumbags – pitting big conglomerate broadcasters against investment banks, two industries that rank somewhere between personal injury attorneys and the guys selling gym memberships, in terms of smarm.

The broadcasters decry the merger as "anti-competitive," a sin against competition, designed to deprive poor consumers of choices. This is, of course, to put it in FCC-approved terms, a bit of cow poop. In fact, they hate this deal because it will add competition – specifically, a major new competitor for them. Keep in mind that these are the very same corporate broadcasters who have screamed for years that the FCC should reduce ownership restrictions and leave them alone while they gobble up smaller competitors.

But now the broadcasters say consolidation is bad, very bad, just gosh darn awful. They're aiming for the moral high ground, portraying the satellite services as smut mongers. "In the coming weeks, policy-makers will have to weigh whether an industry that makes Howard Stern its poster child should be rewarded with a monopoly platform for offensive programming," said National Association of Broadcasters Executive Vice President Dennis Wharton in a statement.

Nasty stuff. And it prompted one radio-industry newsletter to note, "If you're wondering how many times the NAB labeled Stern's show offensive when it aired on broadcast radio, here's a clue: The answer lies somewhere between zero and zip, nothing and nada." It also forgets that Stern is very, very popular – more popular, in fact, than any of the NAB members' perky disc jockeys.

But the broadcasters do have a legitimate gripe. When the FCC issued licenses for the two satellite services in 1995, it specifically banned one company from owning both licenses. To approve the merger, the FCC would have to completely abandon its prior stance. Which, as veteran FCC watchers know, is really no big whoop. But it's still dicey territory, especially considering the FCC rejected a merger of satellite TV companies three years ago.

"A lot has changed in a decade [since the FCC awarded the two satellite-radio licenses]," said XM Chairman Gary Parsons, during a conference call with reporters. "We believe a thoughtful analysis will recognize the broader marketplace." Fear of the FCC's "thoughtful analysis" explains, in part, why investors are not quite ready to gobble up Sirius and XM stock. The two companies have lost more than $6 billion over the years, and there's real concern that at least one won't survive if the FCC rejects the deal. Sirius' stock shed a third of its value in the last year alone, amid signs that the number of subscribers is starting to plateau.

Still, prognosticators believe it's a coin flip as to whether the FCC will approve the merger. Politicians and consumer groups are lining up to express their concerns on the impact of the deal on the poor, downtrodden consumer, while broadcast industry lobbyists are hard at work offering congressmen free back rubs in Aruba, in the name of consumer research.

If the FCC and the broadcasters are really worried about consumers, then they might try talking to a few. Every XM and Sirius subscriber I've talked to loves the idea of the merger. Screw choice; they hated having to choose between the two. They just want more channels.

The main concern of consumer advocates appears to be that prices for satellite radio will soar after the merger, which doesn't make any sense. If the new, merged satellite company tries to raise rates, customers will simply toss their satellite radios into the trash and cancel their subscriptions. The long-suffering consumer has plenty of other ways to spend 12 bucks a month. Heck, if they raise rates, maybe some people will cancel their subscriptions and pick up a book, in which case it can be argued that the merger is good for education.