By Kevin Rollins

Kevin Howley, associate professor of media studies at DePauw University, is really worried about media consolidation. Looking in particular at the Sirius-XM merger, he howls “monopoly” and sees just about everyone getting hurt by this Frankenstein creation. In statement after statement, Howley shows a lack of understanding of business and economics. His arguments instead go to conspiratorial theorizing about the intentions of media companies. And he gives the impression that his personal tastes should outweigh consumer choice. Although mournful and sad sounding, Howley’s screed carries no more intellectual power than a wolf howling at the moon.

His sad song of regret begins by pointing out that the merger will cause the loss of jobs. Good point, professor. Without getting into the free-market arguments about the efficiency of creative destruction, consider these alternatives: 1) XM and Sirius merge and remove the “redundancies.” 2) XM and Sirius do not merge and go out of business. In which situation is the loss of jobs greater? Perhaps Howley knows how to fix each company’s business model to make their financial losses stop. If so, he should consider talking to XM or Sirius about a seat on the board of directors. But, his concern for the workers can’t be taken seriously given the apparent choice.

The next several claims all have a similar feature: they fail to grasp the mutual nature of business relationships. Howley sees the unified control of the satellite radio business as giving it tremendous control over the stakeholders such as advertisers, producers and performers, and the retailers and auto manufacturers which sell satellite radio receivers.

Let’s imagine: Big Satellite Radio tells Best Buy and General Motors that is it is going to require that sellers of the radio receivers pay a license fee to sell its products. This would have the effect of raising the cost of selling the product. Either one of two possibilities exists: the fee will not make the radio receivers unprofitable to sell or it will do so. If the fee is too high, these companies will simply drop the product. That would kill future business growth for Big Satellite Radio. Other sorts of concessions that this “leverage” might bring work similarly. If the radio receiver sellers are unable to benefit from the relationship, they will exit the relationship. In fact, we could also say that Big Satellite Radio is at the mercy of Big Satellite Radio Receiver Retailers (almost as frightening as the Gnomes of Zurich.)

The same is true of relationships with its employees and advertisers. If Sirius-XM does not treat them in a reasonable manner, they can simply leave. The employees and advertisers can take their respective talent and money elsewhere.

Howley compares the Sirius-XM deal to the practices of Clear Channel, which has had much success in growing its market share since the partial deregulation of the industry in 1996. “Clear Channel has acquired 1200 radio stations nationwide. In some local markets, Clear Channels owns as many as eight stations.” It is certainly reasonable to criticize the government’s practice in how it hands out radio station licenses. But, if the lack of competition is the problem, then satellite radio provides an answer. There is no acknowledgement of this fact. Nor is there acknowledgment of the iPod phenomenon or the rise of Internet radio, both of which exist as inexpensive alternatives to the old broadcast networks. This would also seem to be an opportunity for growth in blogs and print publishing which are also substitutes for news radio.

A major concern of Howley’s is “broadcast localism.” The deregulation has created “even higher barriers to entry.” As a free liberal, I’m personally very interested in diversity of thought and the presence of local color. It makes life interesting. But what does Howley mean by barriers to entry? The main barrier (if one means a large, immovable object that one cannot get around) is the scarcity of licenses which is a government policy. The rest is based on the ability of businessmen to build a channel people can access and produce content they want to listen to. Howley captures this when he points out how the Clear Channel business model succeeds: “… through the use of satellite technology, Clear Channel beams canned programming to hundreds of distant stations across the country. As a result, there’s no need for local DJs, reporters, or technicians for that matter.” Clear Channel has found a way to massively reduce costs.

Of course there is still demand for local news, traffic, and weather, even if a station is owned by a national corporation. If a national broadcast company can choose what to put on the radio anything it wants, national or local, what governs its choices? I would argue that they put on the air what people want to listen to. In places where Clear Channel owns multiple stations it can address multiple constituencies. Sirius-XM can offer even more. With the Internet and podcasting, there is no limit to diversity except individuals’ willingness and ability to produce content.

But, despite all these possibilities, Howley is still unhappy. Why? Perhaps he is simply warped in his thinking. For example, he tells us:

…the same week Sirius and XM made their announcement — and the NAB voiced its disingenuous if predictable opposition to the deal — the Federal Communication Commission was conducting a public hearing on media ownership in Harrisburg, Pennsylvania.

Unlike news of the planned Sirius-XM merger, chances are you didn’t hear much about these public hearings. Big Media likes to keep public participation in policy making to a minimum, so press coverage of these hearings is hard to come by. [Emphasis added.]

Wait a minute. Big Media is trying to blind the public to the important debate in Harrisburg, PA about media ownership? What’s next? Will the ABC, NBC, and CBS work together to cover up the new leash law in Tallahassee, FL? What about the zoning commission’s approval of a variance last week in Akron, Ohio? The public must be allowed to know! It is strange the good professor was able find out this information despite the malicious intent and coordinated efforts of the media conspirators. Or maybe it is just not that many people care about this meeting.

Motives are important to Howley. While tweaking the National Association of Broadcasters (NAB) for opposing the merger out of “myopic self-interest,” Howley seems to agree with the content of the NAB’s arguments, saying if it were not for the self-boosterism, the arguments “would be quite touching.” I would be curious to know whether he agrees with NAB when they say (which Howley quotes) the government should “weigh whether an industry that makes Howard Stern its poster child should be rewarded with a monopoly platform for offensive programming.”

This quote suggests that personal tastes should govern the legal treatment of a business. It suggests that the government should approve or deny rights based on a bureaucrat’s like or dislike of Howard Stern’s show. This is really an amazing claim, because it would seem to show a real bias against the First Amendment and equal justice under the law. [I will send this to Howley to see what he says.]

My suspicion is that Howley’s arguments are informed primarily by his personal tastes (romantic, social-democratic leftism?). He would have much greater clarity on these issues if he was not so motivated by an anti-corporate, anti-market ideology. I am willing to be wrong about his motivation, because I do not know the man personally.

I find it very disturbing that future media analysts are receiving training from a person who clearly misinterprets the way businesses operate. I’m just glad that alternative media such as The Free Liberal and Bloomington Alternative do exist, so we are able to have this sort of dialogue, despite Big Media’s ill intentions and the stranglehold it has on the information marketplace. :-p

Kevin Rollins is the editor of The Free Liberal.