Why Should XM Have To Pay The Record Labels In Order To Innovate?

from the a-waste dept

In a bit of unfortunate news, it appears that XM has given in and decided to settle its dispute with the record labels. The company has already settled with Universal Music, with the other major labels expected to quickly follow suit. The Reuters article incorrectly states that this was a patent infringement suit (fact checking, anyone?) but it's actually a copyright issue, where the record labels were using copyright to try to prevent XM from innovating. Specifically, XM has a license so it can play music from the record labels and it fairly pays all the royalties required. The problem, though, was that XM decided to introduce a new device, the Inno, that allowed XM subscribers to record songs and listen to them later. That's a perfectly legitimate use -- and the courts have backed up the fact that "time shifting" by recording programs is perfectly legal. Not so, according to the RIAA, who suddenly felt that because people could record the music from XM, XM now had to pay another licensing fee on top of the licensing fee it already paid. This went directly against what the RIAA had said earlier, when it promised that it would never use copyright laws to prevent new technologies like the VCR, TiVo or the iPod. The Inno clearly fits in as a device just like that... and yet, here was the RIAA demanding extra money to allow such a device to exist. It's really too bad that XM wouldn't continue this fight in court, as it's clearly on the right side -- but with its economic troubles and the impending merger with Sirius, it looks like the company decided it was easier to just pay off Doug Morris and his cronies to leave it alone. Chalk another short-term victory up for Morris, who continues to do everything possible to win in the short-term at the expense of the long-term.

Filed Under: innovation, recording industry, riaa, royalties
Companies: riaa, universal music, xm

NAB Spams FCC Over XM-Sirius Merger; Uses People Who Claim They Had Nothing To Do With It

from the sleazy-tactics dept

The National Association of Broadcasters (NAB) has been pulling out all the stops in fighting the proposed merger between XM and Sirius. What's most amusing is that the NAB's active involvement in the campaign against the merger weakens its own argument. After all, if XM and Sirius really would represent a monopoly, then doesn't that mean that the terrestrial broadcasters the NAB represents don't compete with XM and Sirius and therefore shouldn't care about the merger? Yet, the NAB keeps on fighting despite this rather obvious problem with its position. It seems as though the NAB can't resist pulling out just about every dirty trick in the playbook. It set up astroturf groups to create a pretend grassroots campaign against the merger. It also paid for a "independent" report from a research firm who had previously claimed that terrestrial radio and satellite radio competed -- but quickly changed its tune when the NAB was funding a study.

The latest is that, in the tradition of many other astroturfing campaigns, it bombarded the FCC with letters from "real people" against the merger. There's just one big problem. It would appear that many of those people have no idea they wrote the FCC, and some even claim they're in favor of the merger. That's what a Washington Post investigation found when it tried to track down the people who supposedly used the NAB's spam-o-matic website to protest the merger. Most of the people couldn't even be reached at all, suggesting that they might not even exist. Of those who were actually reached, nine out of ten claimed they had nothing to do with contacting the FCC and the 10th says she remembered reading something about the merger but doesn't remember protesting it to the FCC.

The NAB insists that its program is perfectly legitimate, and that the emailers all meant to protest the merger. An NAB spokesperson claimed: "It was a fairly rigorous process." How rigorous? Take a look at some of the quotes from folks who the NAB claims are absolutely against the merger and then let us know just how "rigorous" the process was:

• "How did they get my name? I don't want someone using my name for something I don't even know about."
• "No sir, I never sent any notes to Washington. This call is the first time I've heard of this."
• "I never sent an e-mail. I don't even know about the issue."
• "I don't know what the merger is about and I don't care. I have no idea what you're talking about."
• "Where did they get my name? If anything, I'd be for [the merger]."

Quite rigorous over there at the NAB, huh?

Filed Under: astroturfing, lobbyist spamming, mergers, nab
Companies: nab, sirius, xm

Political Gamesmanship In XM-Sirius Merger Rolls On

from the the-fun-never-ends dept

While comments filed with the FCC in support of the merger of satellite radio companies XM and Sirius outnumber those opposing it by nearly a four to one margin, they're not seen by many people to carry the same influence as those arguing against the merger. For instance, more than 70 Congressmen have told the heads of the FCC, DOJ and FTC that they should block the merger, and as stock pundit Jim Cramer points out, this has little to do with anything other than legislators' self-interest, since they don't want to upset local broadcasters in their constituencies. He adds that since XM and Sirius are up against such powerful opposition, they've had to go for broke, by announcing pricing plans that, if the merger's approved, could slice their average per-subscriber revenue. The plans offer consumers the ability to choose channels on an a la carte basis -- a move that looks like it's designed to appeal to FCC Chairman Kevin Martin, for whom indecent programming is always an issue. At the outset of the merger announcement, Martin said that XM and Sirius would have to show that "consumers would clearly be better off with both more choice and affordable prices" before the FCC would approve the deal. These new plans would appear to deliver consumers more choices and control over the content they receive, and do so at lower prices. But it's still hard to see that being enough to overcome politicians' objections, fueled by the National Association of Broadcasters' clout.

Filed Under: congress, doj, fcc, ftc, mergers, politics, satellite radio
Companies: nab, sirius, xm

New Reports Turn Over Conventional Wisdom On Pending Deals

from the forget-what-ya-heard dept

Two of the big pending M&A deals right now are Google's purchase of DoubleClick and the proposed tie-up between XM and Sirius. In the case of Google and DoubleClick, it's been assumed that the deal will clear regulatory muster, despite opposition to it from Microsoft. The Sirius-XM deal, however, has been seen as a longshot, in part because of the aggressive opposition to it from terrestrial broadcasters. But two new reports are pouring cold water on the conventional wisdom. An analyst at Bear Stearns believes that the satellite radio deal is looking increasingly likely, a conclusion arrived at by monitoring hearings and reviewing FCC documents. Meanwhile, a Washington policy expert believes that the FTC is likely to block the DoubleClick deal (via Tech Trader Daily), in light of the high concentration of online advertising power that Google would obtain through the deal. Whether you agree with his conclusion or not, he does argue persuasively that this market has indeed become quite concentrated. He also ends with the seemingly inevitable conclusion that Google is set to replace Microsoft as the chief target among the antitrust set.

Filed Under: antitrust, mergers
Companies: doubleclick, google, microsoft, sirius, xm

Clear Channel Says XM-Sirius Merger's Fine -- As Long As It Can Buy More Terrestrial Stations

from the the-more-things-change... dept

Matthew Lasar writes in to let us know that terrestrial radio behemoth Clear Channel says that if the XM/Sirius merger is allowed to proceed, restrictions on terrestrial radio station ownership should be lifted. Once again, by tying the two issues together, Clear Channel is making it clear that terrestrial broadcasters do compete with the satellite radio companies. It's hardly surprising to see Clear Channel take this stance, though, as it's consistently lobbied for the ownership limits (which state that a company can own no more than eight stations per market) to be lifted. The details from a Clear Channel exec's letter to the FCC are slightly amusing. The guy says "With poorer content, local radio stations will lose listeners, and, consequently, advertisers, not because local radio would face a better competitor after the merger, but because it would be able to offer only an inferior product to listeners and advertisers." His comments came in the context of saying that a merged XM-Sirius would lock up all kinds of content through exclusive deals, making it unavailable to terrestrial stations. But taken more broadly, you have to say that the guy knows what he's talking about, given Clear Channel's experience in churning out inferior products with little success.

Filed Under: broadcasting, fcc, mergers, radio
Companies: clear channel, sirius, xm

Company Says If XM and Sirius Merge, It Wants To Enter The Market

from the man-behind-the-curtain? dept

Originally, four companies bid on the licenses to operate satellite radio networks in the US; XM and Sirius were the only two left standing. However, one of the losing companies, Primosphere, is now requesting that if XM and Sirius merge, it be given half their spectrum so it can launch its own service. This is a particularly interesting development. On the face of it, the request by Primosphere would seem to take care of the supposedly pro-consumer concerns of the National Association of Broadcasters, which objects to the merger since it would only leave one satellite radio company. However, a merged XM-Sirius would resist giving up half its spectrum, since that would reduce its programming capacity, so it seems like there could be a catch-22 for the companies. Merge, and lose half their spectrum, or keep the spectrum and remain independent. The fact that Primosphere's popped back up after requesting its license application be withdrawn in 2004 has led some to speculate that another player could be motivating it. Given the way the debate over this merger has played out so far, that wouldn't too surprising.

Filed Under: satellite radio
Companies: primosphere, sirius, xm

Will 'Women Involved In Farm Economics' Tip The Balance In XM/Sirius Debate?

from the or-maybe-the-hispanic-chamber-of-commerce dept

Reasonable people could disagree about when it's best to disallow a given merger on antitrust grounds, but our current system seems both arbitrary and open to manipulation by interested parties. Standing athwart XM and Sirius' attempt to merge is the National Association of Broadcasters, which has tried to make the claim that the merger would eliminate any competition for the companies, a point which is undermined by the NAB's own interest in the outcome. It's obvious why the NAB is interested: It's not that it has some lofty ideals about competition, but rather it fears for the future of its own members, should the companies be allowed to merge. In addition to making its arguments directly, the NAB has also turned to the practice of astoturfing, the establishment of phony grassroots organizations that are in fact nothing more than shill groups. Blatantly self-interested lobbying isn't just limited to the NAB, however. Lobbyists representing the satellite radio firms have cobbled together an odd coalition of supporters, including Southern Baptists, businesswomen, rural voters and Hispanic chambers of commerce. A representative of one group, Women Involved in Farm Economics (WIFE), tells The Wall Street Journal that her group supports the merger because it could allow for expanded radio coverage in rural areas. She also makes the good point that the government seems to have multiple standards depending on the industry, noting that little has been done to prevent consolidation in the meatpacking market (which directly affects WIFE's constituents). Her points are valid, but it's still disturbing that these issues are decided, in large part, by which side can marshal the necessary lobbying firepower, rather than some standard for what's a legitimate level of consolidation within an industry.

Filed Under: antitrust, astroturfing
Companies: nab, sirius, xm