Merger plan leaves XM headquarters intact

XM Satellite Radio and Sirius Satellite Radio said they plan to keep the approximately 800 employees based in the District and their local building if their proposed merger is approved.

XM’s headquarters would remain in its Florida Avenue building in Northeast, Sirius Chief Executive Officer Mel Karmazin told editors and reporters at The Washington Times yesterday in an interview that included XM Chairman Gary Parsons.

“It was very important for XM to continue, after the merger, to be headquartered in Washington, D.C.,” Mr. Karmazin said. “We’ve even said we won’t have less employment here in the District than we already have.”

The building — which is cheap compared with Sirius‘ rent at Rockefeller Center in New York City — and the approximately 800 people who inhabit it during the workday have sparked a real estate renewal in the neighborhood. It now shares the neighborhood with the new Bureau of Alcohol, Tobacco, Firearms and Explosives headquarters and a Metrorail stop, with more construction in the pipeline.

“Clearly, it’s become a valuable asset — it’s in a developing part of town,” Mr. Parsons said.

But the two executives are focusing right now on beating back heated opposition, headed by the National Association of Broadcasters (NAB), to their proposed $13 billion merger.

The deal, announced in February, must be approved by the Department of Justice and the Federal Communications Commission.

The FCC yesterdayopened public comment on a 1997 order that created Sirius and could now stop the merger. FCC Chairman Kevin J. Martin has said that the rule, which could be changed, bans the merger. The agency’s comment period for the merger itself ends July 9.

Opponents say that combining the nation’s only two satellite companies into one would create an unfair, illegal monopoly.

XM and Sirius have faced four congressional hearings over whether the proposed merger violates antitrust practices. And 72 lawmakers last week wrote to Mr. Martin to oppose it.

The NAB, which represents traditional radio stations, says XM and Sirius are the only radio stations with a national audience, meaning they compete only with each other.

“A combined satellite radio entity would thus control approximately 300 channels of radio programming in every local market in the United States, without any realistic check on its ability to assert market power,” NAB board member W. Russell Withers Jr. said in a Senate Commerce, Science and Transportation Committee hearing in April.

XM and Sirius argue that their merger would create a company with plenty of competition from the likes of traditional radio, Internet radio and MP3s.

“If you turn on the satellite radio, you’re not listening to AM radio and FM radio,” Mr. Karmazin said of why the NAB doesn’t want the deal to be approved. “This merger is in the public interest.”

XM and Sirius have said they will not raise subscription rates and that they are willing to follow a price mandate. They say that by combining the companies, they will be able to sell complete XM service, complete Sirius service, a mix of services or all of both services for “substantially” less than what they would cost now ($12.95 for each service), mitigating concerns that the newly formed company would jack up prices.

Story Continues →