XM, Sirius Pitch Merger to Hill

Sirius Satellite Radio chief executive Mel Karmazin, sitting in front of XM Satellite Radio Chairman Gary Parsons last week, told a House panel yesterday that an XM-Sirius merger has price advantages for consumers.
Sirius Satellite Radio chief executive Mel Karmazin, sitting in front of XM Satellite Radio Chairman Gary Parsons last week, told a House panel yesterday that an XM-Sirius merger has price advantages for consumers. (By Chip Somodevilla -- Getty Images)

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By Charles Babington
Washington Post Staff Writer
Thursday, March 8, 2007

The price of satellite radio service has become a sensitive topic in the debate over whether the nation's two space-based radio companies should be allowed to merge, and lawmakers zeroed in on it yesterday.

XM Satellite Radio Holdings of the District and Sirius Satellite Radio have charged customers $12.95 a month for all-or-nothing access to their many channels for several years. If federal regulators permit the companies to merge, listeners may have more options, at prices above and below that figure, executives told a House panel yesterday.

The Federal Communications Commission licensed the companies in 1997 on the condition they stay separate to encourage competition. But their executives say the audio-entertainment field has become so fiercely competitive that they should be allowed to join forces.

Sirius chief executive Mel Karmazin tried to reassure House members yesterday that customers would not be gouged if the FCC approves the merger. To receive all of XM's and all of Sirius's content now, a customer must have two receivers and pay $25.90 a month, Karmazin told the telecommunications subcommittee of the House Energy and Commerce Committee. Under a merger, he said, "prices will drop significantly from that." The discount, he said, probably would be "closer to 10 [dollars] than to 2."

Customers seeking fewer channels would be able to order such service at a yet-to-be-determined amount less than $12.95 a month, said Karmazin, who would be chief executive of the merged company.

Karmazin's earlier testimony to House members left some with the impression that a merged XM-Sirius company would not raise monthly subscription rates above $12.95, even if content from the two companies were combined.

The confusion led to an indirect rebuke of Sirius this week by FCC Chairman Kevin J. Martin, a Republican. Martin told the New York Times that some consumers may be surprised to learn a combined XM-Sirius package might cost more than $12.95 a month. Martin's office said yesterday he had no further comment on the matter.

Groups representing broadcasters and consumers denounced the proposed merger at yesterday's House hearing. The plan has "very severe anti-competitive" implications, said Gene Kimmelman of Consumers Union.

Peter H. Smyth, president and chief executive of Boston-based Greater Media, which owns 20 radio stations in four states, said a Sirius-XM merger would lead to less competition, higher subscription fees and losses of jobs and innovations.

Karmazin said consumers would benefit from more choices, such as having the National Football League and Major League Baseball on one satellite network. The NFL is now on Sirius only and baseball is on XM.


© 2007 The Washington Post Company

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