House Task Force Probes Satellite Radio Deal A House Judiciary Committee task force will study the proposed merger of the nation's two satellite radio companies, XM and Sirius. The Justice Department is concerned that the deal might violate antitrust laws. Sirius' chief executive says it would give consumers more choices and lower prices.

House Task Force Probes Satellite Radio Deal

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STEVE INSKEEP, host:

Here's an update on the possible merger of two satellite radio firms, and we should mention that one of them, Sirius, carries some NPR programming.

The CEO of Sirius Satellite Radio has told House lawmakers that in his view, if his company merges with XM Satellite Radio, it would not create a monopoly. That's his view.

Speaking yesterday on Capitol Hill, Mel Karmazin said a merger could even lower prices.

NPR's Brian Naylor reports.

BRIAN NAYLOR: Sirius CEO Mel Karmazin faced a room full of negative energy as he defended the proposed deal with XM during yesterday's hearing of the House Judiciary Committee. In front of him were congressional skeptics like Chairman John Conyers, a Democrat from Michigan.

Representative JOHN CONYERS (Democrat, Michigan; Chairman, House Judiciary Committee): If we are to define America as broadly as merger supporters advocate, what sort of precedent are we setting for other businesses?

NAYLOR: The satellite companies contend they're not just in competition with themselves, but with everything from iPods to Internet radio, to traditional over-the-air or terrestrial radio. At the other end of the table from Karmazin sat the deal's biggest outright opponent, the president of the National Association of Broadcasters, David Rehr, who represents those traditional radio stations.

Mr. DAVID REHR (President, National Association of Broadcasters): The national satellite radio market is currently a two-company duopoly trying to become a government-sanctioned monopoly. Such a monopoly would violate FCC rules and precedent, congressional policy, and antitrust principles.

NAYLOR: Representatives of public interest groups sitting next to Karmazin also expressed concerns over the deal, saying the company's 14 million subscribers would suffer because of fewer choices.

When it finally came his turn to speak, Karmazin rejected arguments the merger would create a monopoly or lead to fewer consumer choices, while saying the deal was not necessary to either Sirius' or XM's survival.

Mr. MEL KARMAZIN (President, Sirius Satellite Radio): Why we think it should be approved is the fact that the consumer will get more choice, lower prices, and the ability to have less confusion and more content so we believe it should be approved because it is very pro-consumer.

NAYLOR: Karmazin would not commit to how much lower the price for the combined service would be or how long it would stay lower. Both XM and Sirius now charge subscribers $12.95 a month. He said current subscribers wouldn't need new radios because XM channels will be broadcast over the Sirius satellite and vice versa. The NAB's Rehr was skeptical of the claims.

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

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

Mr. KARMAZIN: I was prepared for this by telling, you know, my people told me not to go across tables and not to get angry and, you know, keep my hands folded and be nice. But I certainly don't like this idea of the premise behind saying anything to get a merger approved. Because, you know, at the end of the day, the regulators are going to either approve it or not approve it and we're going to go on, okay?

NAYLOR: Karmazin is credited for having brought Sirius to parity with XM since coming to the company following stints at CBS, Viacom and Infinity Radio helping engineer mergers of those three companies along the way.

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 forbade one company from owning two satellite radio licenses.

Brian Naylor, NPR News, The Capitol.

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