Hard as it might be for today’s music and news radio listeners to believe, there were predictions of an imminent radio monopoly just a few years ago when US satellite radio providers Sirius and XM announced merger plans in 2007 after years of financial losses. The belief that merging media companies will crush new entrants animates many policy discussions surrounding media mergers. The primary complaint was that the merger of Sirius and XM created a radio monopoly that would act anticompetitively and harm consumers. The FCC did extract a few obligations from the merging companies but nonetheless ignored the critics’ dire predictions and allowed the merger.
After years of losses, the combined Sirius XM eventually gained profitability. The chart uses data in financial reports from the two independent firms and the single merged firm to show consistent subscriber growth since 2001. In 2007, before they merged, the two firms together had around 17 million US subscribers. Despite established and new competition, post-merger Sirius XM has managed to add subscribers, and in 2014 Sirius XM subscribers numbered over 27 million.
While the firm was finally profitable, there was no appreciable anticompetitive effect on other radio and music service. The FCC was prescient in ignoring the static models of competition that claimed there would be competitive harm from the merged company. Almost immediately after the 2008 merger, the rise of smartphones and streaming radio like Pandora, Spotify, and podcasts provided competition to satellite radio and to broadcast radio. Pandora alone has tens of millions of US listeners, and traditional broadcast radio maintains over 200 million daily listeners. Markets are not zero sum, and a stronger Sirius XM cannot, despite merger opponents’ earlier predictions, monopolize radio in order to raise subscription fees and degrade programming. If permitted, the dynamic media market in the US provides users an abundance of media options. Regulators should remain skeptical of dire warnings in these fast-moving industries.