The NAB: A history of hypocrisy
When NAB President and CEO David K. Rehr delivered his opening keynote address at NAB2007 in Las Vegas yesterday, he unsurprisingly used the opportunity to voice the NAB's adamant opposition to the Sirius-XM merger. Rehr said the merger "certainly would not be in the consumer's benefit," adding his view that "this is not about the consumer. It is not about advancing technology. It is about lining the pockets of financiers and corporate executives."
So let's take a look at the NAB's long history of lobbying in Washington against the development of satellite radio. Afterall, this is an organization that is so concerned with the advancement of technology, the benefits of the consumer - and at same time, not concerned with the lining of one's pockets. Surely then they wouldn't try to stifle open competition from satellite radio right?
The reality is that for more than 25 years, the NAB has objected to the evolution of communications technology, including satellite television, "drop in" radio stations, low-power radio and low-power TV band devices... all in addition to their opposition to satellite radio.
Their latest effort to block the merger of Sirius and XM is actually only part of a massive multimillion dollar effort that began 17 years ago. Below is a timeline of the NAB's efforts against satellite radio, long before a single satellite was even launched:
1990: The NAB tried to make end run around government plans to create a satellite system by proposing a digital system using land-based radios.
1992: The NAB mobilized opposition to the FCC’s proposal to set aside spectrum for satellite radio.
1994: The NAB submitted a filing to the FCC opposing any licenses to operate satellite radio technology.
1995: The NAB filed a report with the FCC and mounted a publicity campaign warning that satellite radio “will fragment radio audiences and make local radio unprofitable.”
1997: The NAB paid Kagan Consulting to produce an “independent report” claiming that FM radio would suffer great financial harm from satellite radio.
The NAB’s efforts to stop satellite radio failed. That, however, didn't stop their opposition.
At the heart of NAB’s argument is the claim that the merger is anti-competitive. But to me, the best validation of the true competition in the audio marketplace is the fierce response that the NAB has had to the Sirius-XM merger proposal. Understand this: The NAB is not motivated by serving the greater good. They are in business to advocate for their members.
The NAB knows that Sirius and XM compete with over 10,000 free radio stations in the country. The NAB (and its members in numerous SEC filings), have admitted it:
- Last September, in his remarks to the NAB Radio Show in Dallas, Texas, NAB President and CEO David Rehr declared, “In 2006, we have satellite and internet radio [as competitors]. And barely a day passes without the introduction of a new competing device or service. But we have news for our competitors: ‘We will beat you – as we have beaten those change agents in the past.’ ”
- The NAB in October 2006 provided media ownership comments to the FCC seeking relaxation of radio ownership regulations (how ironic?) and cited satellite radio and other competitors as justification.
- That same month at the National Press Club, the NAB’s President and CEO, David Rehr, cited satellite radio as one of AM/FM’s competitors.
But as soon as the merger was announced, the NAB embarked on a non-stop campaign to distract regulators and consumers from the facts surrounding the proposed Sirius-XM merger:
- Washington guns for hire...The NAB has used its money for any Washington hired guns it could find, notably John Ashcroft. The Wall Street Journal reported that "Former Attorney General John Ashcroft, who sent a letter…to his successor Alberto Gonzales blasting the proposed merger of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., approached XM in the days after the merger was announced offering the firm his consulting services." The NAB has since hired James C. Miller and Philip M. Napoli to send their own "independent" letters of opposition.
- And the verdict from the Carmel Group is...
The NAB also paid the Carmel Group, a California consulting firm, to change its views about competition in the audio entertainment market. In an article written a year-and-a-half ago, before being hired by NAB, Carmel’s Jimmy Schaeffler described satellite radio’s competitors as "traditional analog AM & FM radio, as well as burgeoning services like MP3 players, terrestrial radio, and video- and Internet-to-the-vehicle." Yet, after receiving funds from the NAB, Mr. Schaeffler produced a white paper saying exactly the opposite.
- The best funded college student group I know...
On February 28th, Corporate Crime Reporter uncovered the real story about the Consumer Coalition for Competition in Satellite Radio (C3SR), a group of law students opposed to the XM-Sirius merger. C3SR claimed to be an independent grassroots consumer organization and refused to say who funded it. But admitted to being "supported" by the NAB. And is able to afford commissioning reports (which reportedly can cost upwards of $400/hour) by Gregory Sidak of Criterion Economics.
- Legislators legislating on their own behalf...
Mike Hubbard, Alabama's House Minority Leader, was the lead sponsor of a non-binding resolution against the merger of Sirius and XM, which was passed by the Alabama House of Representatives on March 29th. Interestingly, Hubbard is a member of the Alabama Broadcasters Association who owns a terrestrial radio station and an audio production company serving the national broadcast industry.
And, of course, their rhetoric has changed. NAB President Rehr now claims that satellite radio doesn't compete with AM and FM radio.
Now the competition is "one way" (how convenient), and the $20 billion radio industry will face unfair competition from a combined Sirius-XM (which together have a mere 3.4% of total radio listening, according to a recent Arbitron survey).
NAB members like Clear Channel claim that a merged satellite radio company would unfairly hurt "local" radio (imagine that, Clear Channel is now "local"). Of course, Clear Channel Communications is well diversified and is working to provide nationwide mutlichannel audio content for HD Radio stations, mobile wireless audio providers and more. Don't believe me? Just listen for yourself.
The harder the NAB works to quash competition, the easier it is to see their hypocrisy. "Words have consequences," Rehr said in his keynote yesterday. So true.