Congress to probe sat radio merger

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WASHINGTON -- In a sign that the new Congress is serious about scrutinizing media-consolidation issues, the proposed merger of satellite radio providers XM and Sirius will get a thorough legislative review.

The process begins today, when Sirius CEO Mel Karmazin explains the deal to the House Judiciary Committee's newly formed antitrust task force. But it won't end for a while since at least one other House panel plans to examine the deal.

Rep. Ed Markey, D-Mass., told a gathering of broadcasters Tuesday that the Commerce Committee's telecommunications subcommittee, which he chairs, plans to examine the deal as part of a look at issues facing the radio industry.

"We plan to vigorously conduct oversight of the relevant government agencies as well as the industries," Markey said at the National Association of Broadcasters' annual meeting.

The $4.84 billion proposal that would marry the nation's only two satellite radio services has caused considerable consternation among lawmakers.

"The merger between the two satellite radio companies that was announced a few days ago, this is of great interest," Rep. John Dingell, D-Mich., chairman of the House Commerce Committee, told the broadcasters. "We will watch this matter closely."

House Judiciary Committee Rep. John Conyers, D-Mich., expressed similar concerns Tuesday when he announced the look at the merger by the antitrust task force.

"Digital music is at the cutting edge of technology and innovation," he said. "We are holding this hearing to allow members to probe whether this merger will enhance or diminish competition in the digital music distribution industry. Our members will explore how to define this new marketplace and whether this merger will lead to increased choices and lower prices for consumers."

It would be virtually impossible for Congress to actually block the deal, but it can apply pressure to the Justice Department and the FCC, which must approve the merger. Both agencies have to answer to lawmakers, and the FCC is especially vulnerable to congressional pressure because it is a creation of Congress.

"We moved it to a higher level," Colin Crowell, a senior House telecommunications aide, said of the deal. "The agenda, as (Markey) indicated, is to start with oversight. Not just of the agencies but the different parts of the telecommunications industry."

The XM-Sirius deal, like most telecommunications industry transactions, is overseen by a pair of committees on both sides of the Capitol. The House Energy and Commerce Committee and the Senate Commerce Committee examine deals like the satellite radio one for their effect on consumers. The House and Senate Judiciary committees look at them for their effect on competition and antitrust policy.

Broadcasters are pushing to block the deal because they contend that it will set up a national monopoly to compete against local radio stations, even if they are owned by national chains. The broadcasters also contend that both satellite services were licensed as competing services and undoing that would change the rules in the middle of the game.

While broadcasters are pulling out all the stops -- buying ads in Capitol Hill publications telling lawmakers of their opposition as well as deploying NAB president David Rehr to testify today -- they might have some problems convincing lawmakers of their sincerity.

"It's exactly the same argument you use in media ownership," said Neil Fried, a senior GOP telecommunications aide. "It's hard to argue (that) they only compete against each other in one context and they compete against you in another context."
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