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.”


Raising Prices?

There's been speculation that the yet-unnamed satellite radio entity would raise prices if the deal goes through, given that it would have the only license in the U.S. satellite radio niche.

Tiered Pricing Plans Described

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.

Congress to Probe Satellite Merger

A new congressional antitrust task force will hold a hearing next week on the proposed merger of radio subscription companies XM and Sirius, according to a statement from House Judiciary Committee Chairman John Conyers, D-Mich.