Last week's decision by a federal judge to grant the Whole Foods-Wild Oats merger, is a decision that could have "broader ramifications" for other mergers like Sirius-XM's, according to a report from Stifel Nicolaus.
Calling the ruling "a modest positive for the pending XM-Sirius" transaction, Stifel Nicolaus analyst Blair Levin felt that the decision could give the satcasters "some new legal ammo to argue for defining their relevant markets broadly."
"Again, although the facts in each case are different, we believe the judge's decision yesterday will give the advocates of the two pending mergers a bit more credibility when they suggest to government officials that their agencies risk an embarrassing defeat if they try to block the deals," added Levin.
Analysts aren't the only ones who find the Whole Foods/Wild Oats decision to be a positive for Sirius and XM.
"If I'm XM and Sirius, I'm feeling pretty good about this decision, because it has many of the same attributes," said Mark Ostrau, co-chair of law firm Fenwick & West's antitrust group.
"I think these tend to be very factual inquiries but it certainly shows that this court at least was very skeptical of the submarkets, so from that perspective I think it is helpful to XM/Sirius," said Joel Greenberg, partner and co-chair of law firm Kaye Scholer LLP's Corporate and Finance Department. "It certainly can't be harmful."
[Reuters]
Maybe I dont comprehend this, but I fail to see how the "Wild Oats/Whole Foods" merger will have any bearing on XM/Sirius merger. My local Food Town, Stop & Shop, Acme, Whole Foods, Kings and Shoprite as well as 2 health food stores who all cary organicly grown or healthy type foods. All these markets are within 10 minuites of my home. All of these markets compete with eachother. This is not in any way a niche market or the only 2 players in retail food supply stores. A better comparison would have been if B J's, Costco and Sams club all wanted to merge.
There IS some similarly, although they aren't squarely analogous.
In the case of Whole Foods, all these other places you mentioned sell healthfoods and thus "compete" with the merger candidates; yet, shopping at Whole Foods is not the same "shopping experience" as shopping at Acme, Kings, or Shoprite. In effect, you have the option of purchasing a different set of products from Whole Foods versus one of these stores and a totally different "shopping experience".
Really, Whole Foods bears more similarity to the Staples/Office Depot case (which went the other way, i.e., FTC won it). In fact, they seem almost identical -- you can buy consumable office products anywhere, yet, Staples/Office Depot were prevented from merging because the "nature" of the stores were different from shopping at Walmart or where ever.
It relates to XM/Sirius because you can generally acquire most of the content on XM/Sirius anywhere -- Ipods, terrestrial, etc., but the "shopping experience" -- the precise way you purchase the content -- is different. So, there is some similarity and had FTC won its dispute with Whole Foods, it could have been an indication of the door slamming shut on the merger. The fact that they didn't win it doesn't mean the merger is golden, but one more hurdle is removed.
The key difference between these cases and XM/Sirius is that you really cannot buy the XM or Sirius "Products" anywhere else. You cannot buy the exclusive content, you cannot buy the diversity in the broadcasts, you cannot buy Fox News Channel and CNN and ESPN in your car, you can't buy the extensive play-by-play of NFL, MLB, NBA, NHL, etc. So, in effect, these "products" are not available elsewhere. If I live in Chicago and want to listen to every Rangers game on my car radio, I have only one alternative -- XM. Many major cities no longer even HAVE a classical music channel.
While this decision did not hurt the merger's prospects, it should still face a very harsh uphill battle.
Are they even the same courts in charge?
Here's a more general question: WHEN WILL THIS THING GET DECIDED?!?! I thought the original goal was to be finished before some Senate summer vacation, isn't that vacation long over? I know there have been record long delays, but isn't this ridiculously slow?
Is it possible they will never decide? Can this be argued indefinitely?
I know there have been record long delays, but isn't this ridiculously slow?
Is it possible they will never decide? Can this be argued indefinitely?
===========================================================
Martin, IMO this "Merger will be drug out just like the WCS deal for XM ... and the merger thought gets dropped.
I'm with you. I remember some estimates being made on how much the merger will cost to implement, as in before any of the synergy savings kick in, and these ever extending delays will only amplify those costs since there must be all sorts of lobbying and "lawyering" happening. What if NAB doesn't actually have a case? (And I mean besides how we know they really don't have a case, but we suspect they think their evil empire can push their evil scheme through anyways, what if even they know no amount of hogwash can stop it, but they do know they can waste everyone's time) This could all just be a ploy to waste time until Sirius and XM just give up. After all, both companies are operating in the red, they can't afford to wage this bullshit war forever.
While it would likely be a money pit, can Sirius and XM pursue some kind of lawsuit over NAB's meddling? Accuse them of trying to illegally squash competition? Isn't filing bullshit considered contempt of court? I don't know.
I've thought that the merger's case is being made more and more made by the NAB and it's ridiculous claims, that this should be allowed...and the FCC and DOJ were/are trying itheir hardest to find a reason to say NO. That the FCC should be pissed at the NAB for being asses about this thing. The whole NAB admitting competition, the NAB ignoring that the FCC petitions were over 2-1 in favor, electronic stores being in favor, the Toyota fiasco, the 'no options in prices' when there obviously are. Everything the NAB has pointed out has been false or easily disproved by logic. I'm hoping it's not an FCC/DOJ conspiracy. I am growing tired of the wating, myself.
Jeff, it's like this... If the merger goes through you will have to eat your radio.. Hence why the whole foods merger deal is related... Well that's my take on it anyway...
What does the NAB's position have to do with "making the merger's case"?
The NAB is doing its job, which is to pursue an agenda that suits its membership's purpose. What NAB does or doesn't do has nothing to do, whatsoever, with whether the merger should be allowed under the law.
I think the NAB has handled the entire thing idiotically, truly third-rate and sleazy. But in fairness, anyone would have to say that Karmazin has been just as third-rate and sleazy. Has NAB overstated (or misstated) the anti-merger case? Probably. But Karmazin has misrepresented every aspect of this merger.
It was a tall order: Somehow, convince the public as well as the regulators that a merger creating a de facto monopoly is, somehow, GOOD, for consumers. The concept is absurd on its face, and anyone trying to make the case otherwise is either ignorant or lying.
It has long been recognized that there are times when monopolies can serve a purpose -- in particular, where capital formation for the public good is not practical without it (e.g., public utilities, at one time).
Today, it is pretty hard to make the argument that merging to a monopoly is a good thing -- PARTICULARLY, while trying to make the case that the merger is nonessential for the two parties' survival.
Yet, we have Karmazin claiming it will help consumers when it obviously cannot and will not. He allows the public to believe, uncorrected, that a merger will permit them to keep their XM subscription and get NFL games, or keep their Sirius subscription and get MLB games. Not going to happen. And maybe the most egregious was David Frear's claims of where synergies would come from -- ridiculous (they actually claimed that customer service costs would be reduced by the merger -- CAN YOU IMAGINE THE NIGHTMARE OF A CUSTOMER SERVICE PERSON TRYING TO UNTANGLE SOMEONE GETTING BILLED ERRONEOUSLY FOR AN ALA CARTE CHANNEL THEY DIDN'T WANT????). Frear's analysis was worthy of a rank amateur, clearly designed to hide the details in a sea of unsupportable generalizations.
NAB comes across lousy. But there can be no greater embarrassment than the tactics being employed by Sirius to try and hoodwink the public on this deal.
Addressed to Stackpointer:
I read your longwinded comments whenever I get on here, regretfully. Orbitcast comments are 30-40% you these days.
You regularly post claims you cite with the authority of undisputable evidence. Like "The concept is absurd on its face, and anyone trying to make the case otherwise is either ignorant or lying. "
You could be best described as a semi-eloquent jackass. You makes the above claim, however if the relevant market is decided to be audio entertainment, which a case can certainly be made for, your authoratative claims hold no merit.
Also, equating Mel to the NAB is a bit ridiculous. Mel is a successful businessman, many billions of dollars were made, and synergies created under his leadership. While the NAB is a lobbying organization, a detriment to the US, and the concept really shits all over the spirit this country 'should' imbue.
The deal has been put on hold by the FTC.
http://www.bizjournals.com/austin/stories/2007/08/20/daily3.html
I won't address the personal attack portion of your post.
The best thing to do, if you disagree with me, is to show me to be wrong. So, I will ask you: Outside of the limited instances I cited (where monopolies are necessary to insure capital formation), which monopolies, exactly, have been beneficial for consumers? If you know of some, just give a few examples, and instead of attacking me personally (which gets you nowhere), you have made your case.
If the relevant market is determined to be "audio entertainment", it has nothing to do with the FACT that unnecessary creation of a monopoly which diminishes competition (by 50% in this case) is bad for the public.
However, I will not be at all surprised if Mel's clout enables him to pull this off. It will destroy satellite radio for good if it happens, but it would be foolish to count him out.
Finally, you seem to be of the opinion that "Mel is better than the NAB". Personally, I don't get the comparison. And I don't know what his previous mergers have done, but I don't think most people would argue that consumers were helped ANY by them. And your attack against NAB is fine, but a lot of people believe lobbying serves an important purpose. I'm not interested in that discussion, however -- it is a fact of life, and in case you haven't noticed, Mel is doing his share of it, as well.
•StackPointer (and it's not personal, you just seem to make it out to be. You respond in defense to everything merger related.)
My point is this as far as the comment goes; Wasn't the FCC opposed to the two companies merging at some point in history before? I could be wrong about that, but I heard that it was brought up, just not officially proposed, and was commented on how it wouldn't be allowed to happen. Fast forward to just before Feb '07 and I again remember someone bringing up how the merger would be looked at in a different light now a days, with all the forms of entertainment, radio changing. XM/Sirius pounced and started the merger process. Now it's longest period of time for a merger to have a decision rendered. Just seems to be kinda odd in my opinion.
And I don't think people take your side all that much because it's sort of forced opinion. You harped everytime on here, when you wanted me give my opinions, how the 'Whole Foods merger' wasn't going to be allowed and this is the same merger (sort of). Now the differences I see are as Food=Life, Satellite Radio=Entertainment. My opinion on the differences are as clear cut as people being protected when they go grocery shopping, as they should be at the gas pump, as they should be with utilities. We as consumers can't fight these mergers. Satellite radio is a small part of the vast entertaiment field (proven by the NAB), has subscription fees that dictate subscriber loyaltee, and is a hugely smaller audience then FREE radio. It competes to survive (even between the two companies). We subscribers (and I'm PRO MERGER) can end satellite radio: if the product is vastly different, if subscription costs do get out of hand (and the 'a la carte' is great in my mind), if subscribers stop listening and something new comes along. We can choose to support the merger. Satellite radio could fail from the merger, but it just as well could with all of the other places to get music and entertainment these days.
That's still why I'm for the merger. I still don't like the 'Whole Foods merger' comparison, but if Life being merged can be allowed and Entertainment can't, I don't get it.
Is this a full-time job for you Stack?
We get it. You don't like Sirius, and you don't like the fact that Mel will take control of the new company. You have that right. But it is quite apparent to everyone else by now that you will use any personally customized "logic" you can come up with to "prove" that this will create a monopoly. Meanwhile, the vast majority of subscribers (and non-subscribers) feel like they have several options beyond satellite radio, whether or not you personally feel that way. Rational minds agree that satellite radio is a luxury upgrade service. The fact that satrad (arguably) offers content more conveniently does not change that fact. And as long as subscribers feel like they have other options, then the merged company will never have monopoly power, regardless of whether or not you can "prove" that they're a distinct industry.
And if you need some statistics to show you that people feel like they have other options, then look at the monthly churn (~2.5%), the conversion rate (~50%), the overall market penetration (~5%), and the pro-merger comment ratio (~78%).
Remember, your personal opinion that you don't have a choice is just that - your opinion. The fact that you're dedicated enough to spend 5 hours a day on this website is enough to show that you don't represent the typical subscriber.
>>>> My point is this as far as the comment goes; Wasn't the FCC opposed to the two companies merging at some point in history before?
Not just "opposed", but they outright stipulated "no merger" as a condition to licensure. Both XM and Sirius purchased their licenses with this condition attached.
>>>> Fast forward to just before Feb '07 and I again remember someone bringing up how the merger would be looked at in a different light now a days, with all the forms of entertainment, radio changing. XM/Sirius pounced and started the merger process.
The merger talks began early in '06, well before the first mention of this possibility. I cannot prove it, but I suspect the "different light" was an outgrowth of Mel's own remarks.
>>>>> And I don't think people take your side all that much because it's sort of forced opinion.
My opinion is no more forced than yours is. There is no doubt that most posts here on this subject are at odds with mine, and if Ryan tells me to stop posting because I'm monopolizing his blog, I'll stop. But it does seem reasonable to have AT LEAST ONE voice here who hasn't bought Mel's BS hook, line, & sinker.
>>>>You harped everytime on here, when you wanted me give my opinions, how the 'Whole Foods merger' wasn't going to be allowed and this is the same merger (sort of).
Excuse me? I said it wasn't going to be allowed? When, exactly, did I say that?
>>>> Now the differences I see are as Food=Life, Satellite Radio=Entertainment. My opinion on the differences are as clear cut as people being protected when they go grocery shopping, as they should be at the gas pump, as they should be with utilities.
I've previously asked you to explain where, in the antitrust law, it distinguishes between "Life" and "Entertainment"? Does it say, "Food monopolies are not okay, but entertainment monopolies ARE"? I don't believe it does. The issue is whether the consumer, whoever he is and whatever he is buying, is harmed by the merger. I'm not sure how it is in the public interest to allow mergers that create monopolies, whether we're talking about aspirin or yachts.
>>>> We as consumers can't fight these mergers.
Well, we can -- but we probably cannot win. That's what DOJ's role is -- to protect the consumer from powerful organizations who want to create monopolies. You know, the Sherman Act, the Clayton Act, Teddy Roosevelt, all that?
>>>>> Satellite radio is a small part of the vast entertaiment field (proven by the NAB), has subscription fees that dictate subscriber loyaltee, and is a hugely smaller audience then FREE radio. It competes to survive (even between the two companies). We subscribers (and I'm PRO MERGER) can end satellite radio: if the product is vastly different, if subscription costs do get out of hand (and the 'a la carte' is great in my mind), if subscribers stop listening and something new comes along. We can choose to support the merger. Satellite radio could fail from the merger, but it just as well could with all of the other places to get music and entertainment these days.
All true, perhaps, but totally irrelevant. The question is whether a merger to a monopoly materially decreases competition and/or injures consumers. Without any doubt, whatsoever, when there are two companies in the satellite radio business and they merge into one, competition is materially reduced. It doesn't matter that your car has a CD player, an Ipod, Am and FM. What matters is that your sole source of a significant portion of in-car entertainment is now in the hands of one entity instead of two.
>>>> That's still why I'm for the merger. I still don't like the 'Whole Foods merger' comparison, but if Life being merged can be allowed and Entertainment can't, I don't get it.
The reality is that most products "compete" on at least a superficial level with SOME other products. But such superficial competition should not be considered when trying to decide whether a merger reduces competition; otherwise, we would NEVER intervene in mergers (after all, a Harley is like a Buick in SOME ways). The question becomes one of whether the competitors are "substantially identical". Sirius and XM are "substantially identical", while XM and Ipods are not.
This is not a difficult concept to understand.
I agree with JB here. It's funny to read Stackpointer make random claims without evidence, then counter somebody with a differing opinion by demanding evidence.
Also, citing that sometimes monopolies can be neccesary isn't evidence of anything. First, the examples put forth have nothing in common with this merger. Second, everybody knows this wouldn't create a monopoly. Even NAB has a bad habit of admitting radio and satelite radio are competitors, not independent markets.
I also find bashing Karmizin kind of funny, he's only a massively successful multi-millionaire trying to establish the industry everyone here is avid customers of. All I can figure is that Stackpointer either dislikes Satrad, or that he's jealous.
>>> Second, everybody knows this wouldn't create a monopoly.
“You are dealing with two companies — it would be great if there was a monopoly, but the second best thing to a monopoly is a duopoly.”
— Sirius CEO Mel Karmazin (Ad Age, April 22, 2005)
•StackPointer-
'Not just "opposed", but they outright stipulated "no merger" as a condition to licensure. Both XM and Sirius purchased their licenses with this condition attached.'
-And times have changed, as they're allowed to keep approaching the merger now.
'Excuse me? I said it wasn't going to be allowed? When, exactly, did I say that? '
-Dear God, if you're expecting me to find the examples out of the millions of posts you've made...you are nuts. You find your posts and quote yourself. If I read your insight into using the 'Whole Food merger' as anything other than your focal point on monopoly, being disproven by it going through, than I'll stand corrected.
'The merger talks began early in '06, well before the first mention of this possibility. I cannot prove it, but I suspect the "different light" was an outgrowth of Mel's own remarks.'
-Mark another one up to speculation on you part.
'The issue is whether the consumer, whoever he is and whatever he is buying, is harmed by the merger. I'm not sure how it is in the public interest to allow mergers that create monopolies, whether we're talking about aspirin or yachts.'
-Satellite radio merger, from a lot of opinions on here and else where, isn't creating much of a monopoly. It's a branch of entertainment in most eyes. It competes with FREE radio, and apparently doesn't see it as a threat (http://www.orbitcast.com/archives/emmis-cfo-satellite-radio-is-competition-but-ahem-still-not-a-threat.html), Mp3 players, CDs, concerts, live entertainment, cable, etc. Superficial competition or not, as whatever you want to call it, It has competitors. It's subscribers have voiced opinion IN FAVOR to the FCC. We've spoken on here about how we love the idea. Does it seem to be harmful if so many are speaking highly, and see the merger as good for us?
How about you instead of just doing the take a sentance and argue and repeat, just post what makes you most worried about the merger? Convince me to hate it by showing what a worried listener is thinking. No jargon about monopolies. No 'they were told they can't merge'. Just what's goes through your head of what bad will/won't happen.
Sorry to everybody else for the long post...
>>> How about you instead of just doing the take a sentance and argue and repeat, just post what makes you most worried about the merger? Convince me to hate it by showing what a worried listener is thinking. No jargon about monopolies. No 'they were told they can't merge'. Just what's goes through your head of what bad will/won't happen.
First of all, I have no interest in convincing any of you of anything. I'm simply stating my opinion like everyone else here. I'm a subscriber to both services and have been, for the most part, since the very early days after their inceptions.
I have been very consistent in my remarks as to why I believe the merger is bad for consumers -- it creates a monopoly. Reduced competition means lousy service. There will be a less, not more, diverse content offering, as a result of combined channels to cut costs (instead of six classical channels between the two, as we now have, there will be three; instead of two blues channels, there will be one; instead of two full, different sets of decades channels, there will be one, etc.). Anyway you cut it, this is a less diverse offering. Less competition means higher prices and less innovation. It is my view that competition is healthy and a lack of it leads to stagnation.
While I fully comprehend the arguments that Ipods are "competition", it is to me a silly argument. Obviously, they "compete" for entertainment dollars, but they are not head-to-head competitors and Ipods and terrestrial are insufficient to insure that XM's quality stays where it is today. And I don't want to see XM's quality drop to that of Sirius, and I don't want to see Sirius' quality drop to that of terrestrial.
It does create a monopoly, as Mel clearly indicated he wanted to do in April '05. And the context makes it clear that creation of that monopoly is NOT good for consumers.
It is perplexing to me -- never, in my life, have I seen a group of people so willing to defend the creation of a monopoly as those posting here.