- The Washington Times - Monday, August 6, 2007

ANALYSIS/OPINION:

In my four decades in the radio business, I’ve closely watched — and often played an active role in — the evolution of audio entertainment. But nothing I’ve touched though has come close to changing the consumer experience in the way I expect the recent announcement from Sirius and XM to offer a la carte programming following our merger will.

We built our industry by providing choice. Now we’re ready to increase choice, raising it to the next level. This a la carte offering represents the first-ever in subscription media. Consumers will have two different a la carte packages to choose from, in addition to six other programming options. Listeners will truly have the ability to match the content they want with the price they want to pay. Some of the new packages will include family-friendly packages that will allow parents to restrict — and avoid paying for — content they don’t want. As promised on day one, all devices today will still work after the merger. The new programming packages will be available through existing devices, with the exception of the a la carte packages. A la carte programming will require a new device, which will be priced in line with those currently on the market.

So, after our merger, we will not only offer more choice but will make choice cheaper.

We made our mark with consumers, including listeners in minority and rural communities who found, via satellite, what they had long been missing — new and diverse content instead of the tired and homogenized fare being offered by terrestrial radio. We believe a strategy of increased choice and lower price points will build our subscriber base and allow us to become a stronger competitor in the audio entertainment marketplace. Apparently, our giant competitors in terrestrial broadcasting agree. The National Association of Broadcasters and its allies have opposed the merger of Sirius and XM, arguing that the merger will be anti-competitive.

Think about that for a moment. Have you ever heard of a product or service that hurt competition by lowering prices and increasing choice? I don’t think so. In fact, it seems to me the NAB isn’t afraid the merger will foster too little competition. It’s afraid it will foster too much.

The audio entertainment market today is brimming with competition and will be even more competitive after our merger. MP3 players, iPods, HD radio, Internet radio, satellite radio and mobile phones are revolutionizing the listening experience. There has never been a better time to be a consumer.

Programmers today have numerous outlets for distributing their content along with the potential to reap multiple revenue streams. The diversity of delivery modes and channels enriches our world, creating new opportunities for niche programming unlike anything available when I entered this business. And things are only getting better.

In the vast U.S. radio market, even our combined company will still be a relative small fry, accounting for only 3.4 percent of radio listeners. However, the efficiencies and cost savings we realize from the merger will allow us to compete more aggressively with terrestrial radio, the 800-pound gorilla that still dominates the industry. Terrestrial radio reaches 230 million weekly listeners who access terrestrial programming free of charge in virtually every home and vehicle in America.

As for passing the regulatory hurdle of demonstrating that the merger is in the public interest, this transaction is a slam-dunk: Consumers will have lower prices and more choice — the very definition of serving the public interest. What’s more, the fact that our competitors offer their content for free over public airwaves is all the incentive we need to keep our quality high and our prices as low as possible.

We’re proud to be offering a la carte programming to the American people for the first time. And we’re confident that giving consumers the ability to customize their own programming will be good for radio, good for our business and good for consumers.

As I said, it’s a great time to be a consumer (even if it is sometimes a difficult time to be a media executive). We are in the midst of an audio revolution that is reshaping the way people access and enjoy content. Sirius and XM have both served as catalysts for competition, for choice and for greater diversity in programming. Now, we’re ready to unleash a new wave of innovation — most significantly with the introduction of a la carte programming — which heralds a unique form of competition in the entertainment industry, catering to the individual tastes and budgets of listeners.

Mel Karmazin is CEO of Sirius Satellite Radio.

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