Two of Hazlett’s main conclusions - that the merger would benefit consumers and enhance the dynamics of competition within the audio entertainment marketplace - are exactly the opposite of the arguments made by The Carmel Group’s Jimmy Schaeffler against the merger.
Hazlett argues that the fluid nature of the audio entertainment market makes clear that, “satellite broadcasters are not dominant players but compete with a host of other products and services.”
He also claims that “a merger that reduces effective prices to subscribers and delivers billions of dollars worth of cost saving efficiencies is in the public interest.”
Schaeffler’s report, however, finds that “competition, even in a duopoly, forces improvements in service, choice and pricing,” which in turn, benefits consumers.
April 3, 2007—The Carmel Group, the influential research firm whose analysis helped kill the 2003 merger of EchoStar and DirecTV, will release a new report today that outlines the strongest arguments yet against merging satellite radio companies Sirius and XM, The Post has learned.
Sponsored by the National Association of Broadcasters, which has already come out against the deal, the 11-page independent white paper includes a point-by-point rebuttal to the six main arguments put forth by Sirius and XM in favor of a merger.
It concludes - in precisely the opposite terms that Sirius CEO Mel Karmazin has espoused - that approval of the deal will result “in less service, less affordability, less diversity and less choice in content and hardware.”
A key element of the report, and one likely to be a main focal point for regulators, is the “ping-pong chart” in the appendix, which lists nine actions initiated by either Sirius or XM and the reaction they provoked in the other.
For instance, under “retail promotion,” the chart notes that in December 2002, XM launched its first portable satellite radio, which prompted Sirius to do the same just 5 months later.
The chart is designed to show that “competition, even in a duopoly, forces improvements in service, choice and pricing” and that “consumers benefit when Sirius and XM compete to do a better job to earn and retain their subscriptions.”
The Carmel Group devised a similar chart in its analysis of the EchoStar-DirecTV merger that is widely credited with providing the foundation for the arguments that the Federal Communications Commission applied in unanimously rejecting that deal.
The report’s author, Carmel Group Chairman Jimmy Schaeffler, focuses much of the analysis on debunking the most generally acceptable argument put forth by Sirius and XM in favor of a merger - that the competitive marketplace includes terrestrial radio, MP3s, Internet radio and music-enabled cellphones.
Schaeffler notes that while those services may become competitors to Sirius-XM in the future, not one of them is “substitutable” for satellite radio today.
“[We are] hard-pressed to find any instance where Sirius and/or XM acted in a competitive manner against [these] so-called digital competitors,” claims the report.
Schaeffler also charges that the merger attempt reflects “remarkable impatience,” on the part of Sirius and XM, noting it’s been just five years since the companies launched, and both have plenty of cash reserves on their balance sheets.
“Sirius and XM are merely showing the level of their impatience - and greed - by offering this merger proposal today.”
The report concludes with this simple statement: “With all due respect, this proposed merger should not be approved - under any conditions - by the U.S. government.”
peter.lauria@nypost.com
Fresh off its legal victory against EchoStar Communications, TiVo stands to put cable operators on the hook for hundreds of millions of dollars in patent-infringement damages and royalties.
At issue are the set-top boxes cable companies provide subscribers - many of which use a technology that a court ruled is TiVo’s.
“The court rulings are the first step in the process of getting the world to accept the validity of TiVo’s patents,” said The Carmel Group’s Jimmy Schaeffler.
“We seem to be at the inflection point where more and more attention is being paid to Sirius and XM as individual companies,” said The Carmel Group’s Jimmy Schaeffler.
But when the bill comes before the full House Committee on Energy and Commerce this Wednesday, it’s likely the cable industry will be able to benefit from similar freedom when seeking to get into new markets or offering new services.
Or, as The Carmel Group’s Jimmy Schaeffler put it, McSlarrow has done a masterful job of “not only making sure the phone companies don’t get too much of an advantage, but also of setting cable up to extract concessions and draft on the their legislative successes.”
Despite Verizon’s aggressive lobbying efforts, for instance, the company has thus far been able to avoid consumer wrath. The same can’t be said of AT&T, whose CEO, Ed Whitacre, was widely lambasted for calling Internet companies “nuts” for trying to distribute content and other services over its broadband lines for free.
“Seidenberg’s not that public,” said The Carmel Group’s Jimmy Schaeffler. “He prefers to do things behind closed doors with a handshake.”
Operators in those areas, including Cablevision and Time Warner, can potentially attract thousands of subscribers by carrying A-JI.
And, according to Jimmy Schaeffler, a cable industry analyst with The Carmel Group, subscribers of ethnic heritage sign up for more advanced products and stay with the service longer than other subscribers.
“Going after the rights gives Comcast the ability to say to sports programming providers that they expect to be a player, and that they expect to be accommodated if they decide to back off,” said Jimmy Schaeffler, a cable industry analyst with The Carmel Group.
Of course, as Schaeffler noted, that could just be a polite way of saying: “You don’t want to upset ESPN.” Comcast declined to comment for this piece.
