Karmazin Makes New XM-Sirius Price Offer

If the merger between XM Satellite Radio and Sirius Satellite Radio is approved, the combined company would offer new pricing plans to allow consumers to pay only for the stations they want, Sirius chief executive Mel Karmazin said yesterday.

The "a la carte" options are part of Karmazin's latest pitch for the proposed $4.7 billion merger, which requires approval from both the Justice Department and the Federal Communications Commission. Opponents of the deal have argued that a merger would raise prices for consumers by eliminating competition.

The proposed plans would start at $6.99 for 50 stations, or nearly half the current rate of $12.95 for about 150 stations. For $14.99, consumers could pick their 100 favorite stations. Both would allow customers to add channels for 25 cents each. Six other packages would also be available, including a family-friendly lineup for $11.95, and News, Sports and Talk for $9.99.

Sirius and XM said their 14 million subscribers would need to order new radios to take advantage of the new plans, which would be available within a year of a merger.

The packages may also appeal to FCC Chairman Kevin J. Martin, who has urged cable companies to offer programming on a similar basis. Sirius and XM plan to file their proposal with the FCC today, which is the deadline for the companies to respond to public comment on the deal.

"Chairman Martin has always spoken about the consumer benefits of a la carte pricing," said Mary Diamond, spokeswoman for the FCC's media bureau.

"No one will pay more than they do today," Karmazin said yesterday at the National Press Club, adding that the two companies would not be able to afford the new plans without a merger. He has argued that the companies already face intense competition from traditional radio, high-definition radio, Internet radio and portable MP3 players.

But Dennis Wharton, spokesman for the National Association of Broadcasters, the proposed merger's most vocal critic, said policymakers should not be "hoodwinked" by the proposal. "Two hotly competitive companies will promise anything to become a monopoly," he said.

Although some Wall Street analysts recently predicted a favorable outcome for the merger, it still faces regulatory hurdles. In addition to winning approvals, the companies must persuade the FCC to overturn a rule that bars them from combining their airwave licenses. Martin has indicated that rule could be overturned but has said that a monopoly must not hurt consumers.

Gene Kimmelman of Consumers Union said the proposed packages are an "enormous breakthrough" for the concept of a la carte packaging. "But," he added, "it still doesn't address the fundamental anti-competitive concerns of the merger."