Sirius CEO argues for radio merger

LA Times ^ | March 1, 2007

[Wolfie]

Sirius CEO argues for radio merger

WASHINGTON — Despite vowing not to raise their prices, the nation's only two satellite radio providers found their proposed merger to be a tough sell Wednesday on Capitol Hill.

"You've got some high hurdles to overcome, don't you think?" House Judiciary Committee Chairman John Conyers Jr. (D-Mich.) told Mel Karmazin, chief executive of Sirius Satellite Radio Inc.

Karmazin, who would run the new company if federal regulators approve Sirius' proposed merger with XM Satellite Radio Holdings Inc., tried to overcome those hurdles by promising not to hike for an unspecified period the $12.95 monthly subscription rate that both companies charge.

The reason for the concession is simple, Karmazin said, and is the heart of the case Sirius and XM are trying to make: They now compete with a host of technologies that don't charge a cent — including broadcast radio, iPods and music that streams over the Internet.

"The idea of raising prices to compete with free is bizarre," Karmazin said. But he didn't say how long prices would remain unchanged.

Price is a major concern for several members of the committee's antitrust task force. Congress doesn't have to approve the deal, but its views could influence officials at the Department of Justice and the Federal Communications Commission, which must bless the merger.

"Why would we eliminate one of the two competitors here?" said Rep. Robert W. Goodlatte (R-Va.). "I believe prices are going up if you are the only one."

His fears were echoed by Mark Cooper, director of research at the Consumer Federation of America.

"Competition is the consumer's best friend," Cooper told the committee, warning that "a tsunami of mergers will ripple through the digital space" if regulators agree to the market definition urged by Sirius and XM.

[ilgipper]

Karmazin is pretty much spot on here. Even today, the competition for satellite is free radio and purchased music (cd or mp3). If the price goes up, people will drop it. I am sure at some point the price may go up some....whether the merger takes place or not. Thing is, both organizations have to compete now to change people's behavior.

If XM was $3/mo, subscriptions would go up tremendously. If it was $20/mo, subscriptions would plummet. I for one would not pay much more than I do today.

[TWohlford]

If competition per se is a great thing, then why don't we have competing Federal governments?

If competition is so great, why does John Conyers love it when he runs for yet another term unopposed by a GOP candidate?

---

There are some things which are "natural monopolies". This technology, at least for right now, might fall into that category.


Signed,
XM sub who now can't listen to NASCAR

[2banana]

I find it tough to feel any sympathy for a company that spent 500 million dollars to recruit Howard Stern... That being said - the stock may be worth looking into (kinda like how cable TV started)

[Yo-Yo]

Sirius and XM were competing against broadcast radio when they started. To bring up the fact that they have to compete against broadcast radio is a canard.

XM and Sirius do not compete against Internet streaming media at all, simply because 99+% of their listenership is mobile, where streaming Internet is not.

Finally, if the two merged, one of the satellite formats will eventually be turned off. Will it be Sirius or XM subscribers that will have to buy new hardware?

[TWohlford]

I just called Conyers' office. Jeez. Now I need to take a shower.

Conyers doesn't have have a problem w/ the fact that the two Detroit newspapers have a "joint operating agreement" which has them sharing printing facilities and weekend editions.

Conyers doesn't have a problem with the fact that 99.9% of this constituents don't have a choice in cable TV provider.

Conyers doesn't mind that his constituents have only one choice of electricity providers.

So, why does he have an issue w/ XM and Sirius merging, as a federally-regulated monopoly?

And, for the record, competition from "free" radio is NOT a "canard." It is very real. If I am unhappy w/ my Sat radio, then I simply turn it off and listen to traditional radio, or CDs, or iPod, or whatever.

Finally, as high-speed Internet feeds via cell phone service spreads, we have the ability to sustain an internet connection in our cars. In fact, I talked to a man who was checking his email as his buddy drove 100+ mph down a Michigan Interstate (they were late for a meeting). It doesn't take a visionary to realize that music feeds via this wireless Internet are a short step behind data feeds.

[Yo-Yo]

And, for the record, competition from "free" radio is NOT a "canard." It is very real. If I am unhappy w/ my Sat radio, then I simply turn it off and listen to traditional radio, or CDs, or iPod, or whatever.

I wasn't clear. What I was trying to say is that Sirius and XM knew from the very start that they were competing against broadcast radio when they got into the business. To claim now that they should be allowed to merge because they are in competition with broadcast radio doesn't hold water, because it isn't anything new.

Broadcast radio, for the record, has been much more afraid of Sirius and XM than the other way around. That's why both Sirius and XM have limits on the amount of local content they can include in their broadcasts, and why they can't use their terrestrial repeaters to put out programming that is different in any way from the satellite delivered programming.

Otherwise, Sirius and XM could run local ads on the terrestrial repeaters in large citys such as NYC, Atlanta, and others, in direct competition to broadcast radio. The broadcasters pursuaded the FCC to expressly prohibit such use of satellite's terrestrial repeater network.

[It Aint Easy]

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