Quote one from the Carmel Group, circa October 2005…

“…satellite radio, with more than seven mil. subscribers, and its competition comes in the form of traditional analog AM & FM radio, as well as burgeoning services like MP3 players, terrestrial radio, and video- and Internet-to-the-vehicle. “

Quote two from the Carmel Group, circa April 2007…

“Sirius and XM make an argument that is critical to the success of this proposed merger. They state that their competitive landscape presently includes all forms of terrestrial radio (i.e., analog AM and FM, digital HD and Internet radio), as well as digital services such as MP3 devices and music-to-cellular telephones. This position is ludicrous. In fact, nothing could be further from the truth.”

Orbitcast really nailed that one pretty hard.

So what does Jimmy Schaeffler, author of both quotes have to say for himself? From Ars Technica:

Schaeffler tells Ars that it’s really quite simple: his position hasn’t changed at all. In the post, he points out that this is a “new battle” and that potential competitors like HD radio are “burgeoning services.” In a phone conversation, Schaeffler argued that these other services may in fact be competitors to satellite radio someday, but are not at the moment—and says that’s what he was saying two years ago.

This is a point that he makes in the whitepaper as well, saying that “Sirius and XM try, in a typically disingenuous fashion, to broadly define a future competitive landscape as one that exists today (and thus redefine this merger’s review standard), in order to meet their own, one-time, selfish needs.”

“Maybe in five, seven, 10 years this argument will sell,” he tells Ars, “but not today.”

That’s because the issue for Schaeffler is “substitutable competition.” For vehicles, especially, what services can be easily and widely substituted for satellite radio? iPod adapters and HD radios are still not widely available as manufacturer options, he says, and therefore can’t be counted as true competitors. When I ask what this means for AM/FM radio, which is available in just about every car in the country, Schaeffler admits that this could be seen as competition. But he points out that each radio station only competes for satellite in a particular market, not nationwide. In the whitepaper, he lays out some additional distinctions that set satellite radio apart: it charges monthly fees, it produces its own programming, and it is ad-free.

“You can argue [that all these services are substitutable] till you’re blue in the face, but it’s not there,” he says.

So his position hasn’t changed. He then goes on to detail why its changed.

Got that?

Yeah… It makes my head hurt, too.

The simple fact is this. Every single anti-merger study that has come out (and they’ve all been anti-merger unless you have your head up your ass and aren’t reading them) has been funded in some way by the NAB (The National Asssociation of Broadcasters). This Schaeffler guy was fine with the competition that satellite radio faced when he wasn’t being bankrolled by the NAB from sources like iPods and FM/AM radio. Now that he’s getting a check from the NAB, he wants you to believe that the only competition that satellite radio faces at all is from itself.

That’s convenient because it’s the same anti-merger rhetoric flying out of the mouths of folks at the NAB. Just don’t call it a flip-flop. It’s a position enhancement based on *cough* new information. Of course, he explains that, also:

As for Schaeffler, he readily admits that his report is biased in the sense that it’s not a balanced study. He was paid to produce something that the NAB could use, and this is clearly mentioned at the beginning of the paper.

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