Radio Deal Could Face Technical Difficulties

The companies say they could eliminate some duplication under a merger. Each, for example, has individual channels dedicated to music from the 1960s, '70s, '80s and '90s, and to various genres, such as country, rock and jazz. But analysts question how many XM or Sirius channels can be dumped before subscribers begin to feel they are getting fewer options, not more. Dropping music channels is important, because music requires more spectrum bandwidth than do talk or sports programs.

Still, "the promise of more programming at the same time as protecting the current programming is hard to believe, given the limited capacity of the two current satellite radio systems," said Gene Kimmelman, who tracks telecom issues for Consumers Union and who testified at the March 7 hearing. "Mr. Karmazin needs to explain much more clearly how he can both offer a guarantee for today's channels and new packages without an enormous technological breakthrough that doesn't exist today," Kimmelman said.

Frear, interviewed separately, said the feat is achievable. Partly through data compression and elimination of redundant material, he said, "we can make room for some additional channels, which could be the current Sirius lineup and a 'best of XM' offer."

But even big technological breakthroughs may be of limited help, Pohlmann said. Satellite radio engineers might find a way to compress much more data without greatly eroding sound quality, he said, but the data would have to be sent by upgraded satellites and received by new, upgraded radios. Given Karmazin's promise that existing XM and Sirius receivers will serve their owners for years to come, Pohlmann said, such a breakthrough "does no good."

As for hopes that a merged company could quickly reduce costs, analysts note that many of the firms' costliest attractions -- including Howard Stern, Oprah Winfrey, NASCAR, Major League Baseball and the NFL -- hold long-term contracts. "Our concern is that a lot of the big programming costs for the high-profile artists aren't going away anytime soon," said analyst Tom Eagan of Oppenheimer & Co.

Meanwhile, the satellite radio companies are learning there's a cost to dropping one channel for another. C-SPAN Radio remains on XM but not on Sirius. "We were unable to reach agreement with them for a new contract because they demanded rights for extensive preemption of our channel in order to carry sports programming," C-SPAN stated on its Web site after receiving numerous complaints.

Ed Knight, a federal government retiree from Mount Vernon, is among the unhappy C-SPAN devotees. His new Chrysler came with Sirius, he said, "and one of the reasons I was enthusiastic about it was the C-SPAN." Knight, 70, called Sirius and C-SPAN to protest, to no avail.

Frear said C-SPAN "was not a highly listened-to channel. . . . We have others that speak to public affairs, including BBC, CNN and Fox News."