Former Attorney General John Ashcroft has sent a letter to his successor, Attorney General Alberto Gonzales, saying he thinks that terrestrial radio should not be considered a direct competitor in the satellite radio market for purposes of a Justice Department review.
According to a copy of the letter, Ashcroft, who now heads The Ashcroft Group consulting firm, wrote Gonzales that "a thorough study of consumer demands and preferences would show that terrestrial radio stations should not be considered part of the satellite radio market for the purposes of the review of the current merger because they are not providing substitute content..... Consumers, I believe, subscribe to satellite radio not because it comes from satellites rather than radio towers but because it is a unique mobile multichannel product with nationwide reach."
"NAB retained former Attorney General Ashcroft to review and assess the proposed XM/Sirius merger," said NAB spokesman Dennis Wharton. "His review was sent to all members of the House and Senate Judiciary and Commerce Committees."
Ashcroft's argument is the same argument the National Association of Broadcasters, including NAB President David Rehr, made on Capitol Hill in a House hearing this week.
"A close examination of the market reveals that Sirius and XM are the only two companies providing their product," Ashcroft wrote. He calls the product "a unique, multi-channel product with nationwide reach" -- essentially the same definition NAB has been using.
XM and Sirius have proposed merging the two services, saying it is in the consumer's interest and will increase choice while lowering price. The Justice Department will have to decide whether there is a competitor that will provide a governor on that price and service. The satellite companies have promised to cap prices but, according to critics, such a condition would eventually sunset.