House Task Force Probes Satellite Radio Deal

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Sirius Satellite Radio CEO Mel Karmazin told Congress Wednesday that a merger between his company and XM Radio could actually lead to lower prices for subscribers.

Federal antitrust regulators must approve the deal.

He said the new company would combine some of the top offerings from each service: Major League Baseball and Oprah from XM, for instance; Martha Stewart and Howard Stern from Sirius. (Full disclosure: Sirius carries some NPR programming.)

But Karmazin got plenty of static from Rep. John Conyers (D-MI) and other members of the House Judiciary Committee.

"If we are to define the market as broadly as merger supporters advocate, what sort of precedent are we setting for other businesses?" asked Conyers, the chairman of the panel.

The satellite companies contend they are not just in competition with themselves, but with everything from iPods, to Internet radio, to standard radio stations.

At the other end of the table from Karmazin sat the deal's biggest opponent, National Association of Broadcasters President David Rehr, who represents those traditional radio stations:

"The national satellite radio market is currently a two-company duopoly trying to become a government sanctioned monopoly," he said. "Such a monopoly would violate FCC (Federal Communications Commission) rules ... and antitrust principles."

Representatives of public-interest groups also expressed concerns over the deal, saying the companies' 14 million subscribers would suffer because of fewer choices.

Karmazin rejected arguments that the merger would create a monopoly, or lead to fewer consumer choices. He also said the deal was not necessary to the survival of either company.

He would not to commit to how much lower the price for the combined service would be, or how long it would stay at that price. Both XM and Sirius now charge subscribers $12.95 a month. He said current subscribers wouldn't need new radios, because XM channels would be broadcast over the Sirius satellite and vice versa.

Rehr was skeptical of the claims.

"People who want to attain a government-sanctioned monopoly, with all due respect, will say and do about anything to grab it," he said.

Karmazin, who stands to become chairman of the combined companies if the estimated $13 billion deal goes through, rejected that characterization.

Karmazin is credited for having brought Sirius to parity with XM. He has past experience with large mergers, too.

He is going to need every bit of the salesmanship he displayed yesterday as he navigates a long regulatory road that includes winning approval from the Justice department and the FCC, which specifically barred one company from owning two satellite radio licenses.



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