The Department of Justice's approval of the merger of satellite radio's Sirius and XM on Tuesday drew loud protests from radio groups who oppose the merger on anti-competitive grounds.
The Justice Department, saying the transaction is unlikely to harm consumers, late Monday approved the proposed merger, which now awaits the approval of the U.S. Federal Communications Commission before it becomes official.
"We are at a loss as to how the DOJ came to the conclusion it did, but now the ball bounces over to the FCC's court and that's where the real decisions are going to be made as to whether this is in the best interest of consumers," said Peter Ferrara, CEO of the HD Digital Radio Alliance.
Opponents of the merger, who run the gamut from supporters of terrestrial radio to consumer advocates, hope the FCC rejects the merger or adds conditions on the merger that limit the use of "unfair advantages" gained in the merger.
One of the conditions opponents urge is the requirement that HD radio, a digital transmission technology used by terrestrial radio firms, be included in all satellite radio receivers. Another condition calls for the merged entity to terminate all exclusive arrangements with auto makers, suppliers, and retailers.
In these areas, opponents say, XM-Sirius could use its combined resources, and nationwide leverage to lock out emerging terrestrial radio technologies such as HD Radio.
One of the marketing advantages satellite radio has over terrestrial is that it is nationwide and international in scope while terrestrial radio firms are limited to local or regional markets.
"I still do not understand how satellite radio is able to operate a monopoly with hundreds of channels in every market, while highly competitive local radio broadcasters are limited to a handful of stations in each market," said Peter Smyth, CEO of Greater Media, which owns 23 radio stations.
The DOJ said it approved the merger on the grounds that satellite radio competes with a slew of alternatives including terrestrial radio, MP3 players, and Internet radio, so XM-Sirius will not be a monopoly.
The question of competitiveness is the heart of the disagreement. Opponents of the merger insist that XM-Sirius is a subscription-based service while terrestrial radio is a free local service, so the two do not compete.