Broadcasters' Unique Argument on Sat Radio Merger, Media Rules

On Monday, a group of radio station owners came up with a unique challenge of both the Federal Communications Commission's recent moves on media ownership and the pending XM/Sirius merger, basically telling the FCC that it cannot have it both ways with the separate proceedings.

The group of broadcasters - Beasley Broadcast Group, Entercom Communications, Greater Media, Lincoln Financial Media and Saga Communications - sent a letter to the commission explaining its opinion on the matter. In their correspondence, the companies said the FCC must "reconcile its own recent, unequivocal determination that terrestrial radio broadcasters do not compete in a larger market with alternative audio services" with the Justice Department's contrary conclusion that the satellite radio companies compete in the broader digital audio marketplace.

In early February, the FCC released its order on broadcast/media ownership rules, concluding there is a lack of entertainment alternatives that are good substitutes for radio. "It rejected the contrary argument that terrestrial radio broadcasters were in competition with satellite radio, MP3 players, internet radio stations, subscription-based music services from cable, DBS and IPTV providers, and Wi-Max," the broadcaster letter stated.

Six weeks later, the Justice Department cleared the XM/Sirius merger, saying its investigation found the companies faced competition from traditional AM/FM radio, HD Radio, MP3 players and iPods.

"These recent judgments of the FCC and the DOJ are fundamentally inconsistent. If audio market competition faced by satellite radio providers is as wide-ranging as the DOJ found, then this broader competition for listeners necessarily impacts traditional AM/FM and HD Radio as well, and should have been considered in weighing the continued relevance of the broadcast multiple ownership rules," the broadcasters said in their letter.

Also, the group said if the FCC allows the XM/Sirius merger to proceed, the agency should prohibit a combined satellite radio entity from subsidizing or licensing any satellite radio receiver unless the receiver includes an HD radio tuner.