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Satellite radio plan draws fire

Chairman of a Senate panel says a merger proposal by Sirius and XM would create a "business colossus."

March 21, 2007|Jim Puzzanghera | Times Staff Writer

WASHINGTON — The chairman of the Senate's antitrust subcommittee Tuesday blasted the proposed merger of the country's two satellite radio providers, saying it would create a "business colossus" that would raise prices for listeners.

"You have every right to ask ... but it's another thing to grant you that permission to be virtually unrivaled, unchallenged in this whole area," Sen. Herb Kohl (D-Wis.) said at the third hearing on Capitol Hill over the merger. "What a business! I might quit this job to go into your business."

Kohl's strong criticism underscores the hurdles that Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. face in getting their merger approved by federal regulators. Although Congress has no formal role, Sirius Chief Executive Mel Karmazin, who would head the joint company, has not received a warm reception for the plan at any of the hearings.

Kohl has been the most outspoken critic. But Karmazin forcefully disagreed with Kohl's contention that Sirius and XM would wield monopoly power. He contended that traditional radio stations, iPods, cellphones and Internet radio provided enough choices for listeners.

"There is all this competition," Karmazin said. "We're not talking about being a monopoly."

He reiterated two promises from earlier hearings: not to raise prices for an unspecified period after the merger for the $12.95-a-month programming packages subscribers now receive; and to offer a new package with the best of both companies' exclusive content for significantly less than the $25.90 a month it currently costs to subscribe to Sirius and XM.

"If the argument is that we're going to raise our price, we're not," Karmazin said.

But Kohl wasn't satisfied. He asked Karmazin if he would submit future price increases to federal review. Karmazin said he'd be open to any possible merger conditions.

Congress can't impose conditions on the merger, which must be approved by the Department of Justice and the Federal Communications Commission. But Karmazin's responses to congressional questions have shown regulators what Sirius and XM might accept.

After the first hearing, by a House antitrust task force last month, FCC Chairman Kevin J. Martin said Karmazin's initial price guarantees were confusing and publicly suggested that he clarify them.

Martin has said the proposed merger faced a "high" hurdle in gaining FCC approval. A commission rule to ensure competition prohibits the nation's only two satellite radio providers from merging, although the FCC can change it.

Broadcasters adamantly oppose the merger, and six public interest groups, including Common Cause and the Consumer Federation of America, wrote to senators Tuesday urging them to push for "tough regulatory scrutiny" of the merger.

Kohl wasn't the only critic at the hearing by the Subcommittee on Antitrust, Competition Policy and Consumer Rights. Sen. Sam Brownback (R-Kan.) criticized Sirius and XM for providing "explicit sexual" programs, such as "Playboy Radio."

"Would you agree right now not to put pornographic material on the combined stations?" Brownback asked Karmazin.

Karmazin would not, saying pornography was difficult to define. He also declined Brownback's request to voluntarily comply with indecency standards that apply to over-the-air broadcasters.

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