A few weeks ago I suggested here that a merger between the two satellite radio firms, Sirius and XM, would not necessarily be as much of an antitrust problem as Sirius CEO Mel Karmazin seems to think.
Now market analyst Jim Cramer has weighed in on the issue and encouraged Karmazin to have Sirius do a hostile takeover of XM. While Cramer’s heart is in the right place, his suggestion that the merger would allow Sirius to “raise its prices, dictate its auto prices and get into retail with a vengeanceâ€? is not likely to help the deal succeed.
The extensive antitrust discussion that we had here a few weeks ago was all about why the deal would *not* enable Sirius/XM to raise its prices. As we pointed out then, these firms face extensive competition from other media, especially terrestrial radio, and therefore antitrust regulators need not be concerned about prices increasing in consequence of the merger. The benefits of the deal would rather be to reduce costs and improve product choices, particularly for consumers who would like one-stop access to proprietary content from both firms (e.g., someone who is a fan both of baseball, which XM carries, and football, which Sirius carries).
If Cramer is right that the deal would cause prices to increase, then there is more of an antitrust issue here than we thought.
