Karmazin: ‘Lower Price’ Created if Merger Approved; Religious Content to Remain

Programming content is taking a higher profile lately in Capitol Hill discussion of the XM/Sirius merger.
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Programming content is taking a higher profile lately in Capitol Hill discussion of the XM/Sirius merger.

Now members of the Antitrust Subcommittee of the Senate Judiciary Committee have had a chance to hear testimony about the proposed deal. A couple of things were discussed in Tuesday’s hearing that haven’t been highlighted in previous hearings: new pricing details as well as questions about indecent and religious content.

Not that Congress has oversight in matters of content in a merger review context, but lawmakers chose to go there anyway.

Sen. Orrin Hatch, R-Utah, said he assumes the faith-based channels on XM and Sirius would be cut in half if the companies merged.

Mel Karmazin, Sirius President/CEO and the planned head of the merged entity, said those channels are popular and “You should not assume there’d be a reduction.” Mel seemed to promise that there would be no cuts, though he didn’t come right out and say so.

Hatch asked how children would be protected from indecent content; Karmazin said customers can have certain channels blocked — and adding a new twist — wouldn’t have to pay for that adult content.

“Not only can they block it, but there’d be a cost reduction in their bill. They’re not getting it and not subsidizing it somewhere else,” said Karmazin, referring to a tiered content pricing system.

David Balto, a former antitrust lawyer for the Justice Department and FTC, told lawmakers, “Courts have almost never approved mergers” in which the parties said they wouldn’t raise prices. “Creating a monopoly is a problem. Our antitrust laws don’t allow you to go back later and re-do.”

Referring to the movie “It’s a Wonderful Life,” Balto said, “I’m not suggesting that satellite radio is like Mr. Potter … but nothing replaces competition.”

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Separately, Mel sought to clarify a new pricing scheme, a confusing part of past hearings. He said, “Today you pay $12.95” to get each service. If the companies merged, “We would create a lower price package.” He threw out a possible figure of $8.95 a month “or some lower price” and said the merged entity “would be willing to work with regulators” on that point.

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