The League of Rural Voters is going to bat to support the proposed merger between the only two satellite radio companies - Sirius and XM. I wrote about this puzzling dynamic at some length a few weeks ago. You can read that analysis here.
The report seeks to rebut the argument that the proposed merger between Sirius and XM is similar to the proposed merger between satellite television providers Echostar and DirectTV. The FCC rejected that merger citing concerns over a lack of competition, consumer choice, and diversity of viewpoints in the market. In the latter half of my original post on this topic, I wrote about the rejected Echostar/DirectTV merger and its relation to the proposed Sirius/XM merger.
Quite aware of the argument against their position, the League of Rural Voters wrote the following in their press release:
League Of Rural Voters: SIRUS/XM merger is not ECHOSTAR/DIRECTV
The League of Rural Voters (LRV) today released a new analysis drawing clear differences between the DBS [Direct Broadcast Satellite] market in the 2002 Echostar/DirecTV attempt to merge, and the expanding, competitive audio entertainment market in the SIRIUS/XM merger. In doing so, LRV reaffirmed its support for the proposed merger between SIRIUS Satellite Radio (Nasdaq: SIRI) and XM Satellite Radio (Nasdaq: XMSR).
The press release links to a five page report (pdf) on the League of Rural Voters’ website. The report, with the League’s logo stamped on the front, sets out a point-by-point argument to show how the Sirius/XM merger is “A Fundamentally Different Merger for Rural Consumers” than the proposed Echostar/DirectTV merger was. The report takes up the FCC’s reasons for rejecting the satellite TV merger and offers a brief narrative in response to each to show that “Such concerns do not apply to satellite radio.”
I am not going to do a detailed analysis of the report right now. I will say this though, it certainly does not read like a report that vigorously examines the issue, and then draws a conclusion based on sufficient evidence pointing in one direction. Rather, it summarily dismisses each point from the Echostar/DirectTV case with very little real analysis of the issues at hand. But I want to leave the conclusion of the report aside for now. There are more interesting things going on here.
Of primary interest to me at this point is why the League of Rural Voters cares so much about this issue. The League has published a grand total of of 5 press releases since October of 2006, and two of them have been about their support for the Sirius/XM merger. They only list one other report on their website. This is not a group that runs around issuing press releases and reports on everything under the sun of possible interest to their cause. The League’s support of the proposed satellite radio merger represents a significant part of their work this year.
So, why satellite radio? The question simply baffles me. It is a Farm Bill year, after all. The Farm Bill is arguably the piece of legislation of most interest to rural issues, and it only comes up for debate and changes once every five years. One might think the Farm Bill would be of interest to the League of Rural Voters. However, on their website they have only a “Coming Soon” message on their 2007 Farm Bill page. Why does the League of Rural Voters feel compelled to spend time fighting to allow a merger of Sirius and XM radio, but lack the time to develop even a single page on their website about the 2007 Farm Bill?
But it gets even more interesting.
The LA Times ran an excellent opinion piece on the proposed merger and the role of interest groups in the process. While the whole story is quite interesting, the final paragraph is the kicker for us tonight.
Sirius, XM and American values
Got a big business deal in the works? Start lining up interest groups.
Worried about the proposed merger between the XM and Sirius satellite radio services? So are more than 70 members of Congress, Consumers Union, the Consumer Federation of America and the American Antitrust Institute, among other groups.
The article goes on to discuss this phenomena — whenever regulators are set to make an important and controversial decision, a “swarm of advocacy groups representing a rainbow array of ethnic groups, regional interests and other constituencies” emerge out of the woodwork to comment.
Some of them weigh in on their own accord. For example, Consumers Union and Consumer Federation routinely take positions on mergers involving telecommunications services (and, typically, oppose them). But other groups step up to the microphone at the behest of parties most affected by the government’s action. It’s become part of the game: If you want the Federal Communications Commission (FCC) to bless your merger, as XM and Sirius do, you line up as many grass-roots allies as you can. Your opponents do too.
Given the stakes involved, it’s not surprising that the process has been abused. [snip] There’s also the practice of pouring money into supposedly independent research groups, then trotting out studies that, amazingly enough, support their benefactors’ point of view.
[Grassroots groups have] also helped XM and Sirius advance an argument that the publicly traded services can’t make themselves: that the two companies are too weak to survive as independent entities.
That’s one of the points made by the Minneapolis-based League of Rural Voters, which joined the debate at the behest of XM and Sirius. It released a report last week that argued the merger was fundamentally different from the proposed merger of satellite TV providers DirecTV and EchoStar, which the FCC unanimously rejected in 2002. Niel Ritchie, the league’s executive director, admitted that “the XM guys did this particular study,” but he said he agreed with its conclusions and was happy to put it out under the league’s banner.
Well now. The League of Rural Voters didn’t find their interest in satellite radio on their own. They entered the debate at the “behest of XM and Sirius.” And that not-so-balanced report (pdf) published by the League of Rural Voters was actually written by the corporate interest under scrutiny for their proposed merger. I double and triple checked. There is nothing in the report that indicates any authorship other than the League of Rural Voters.
I’ll leave it there for tonight. You all can draw your own conclusions from those last pieces of information.