- The Washington Times - Tuesday, February 20, 2007

ASSOCIATED PRESS

Satellite-radio rivals XM and Sirius have every intention of merging, but not just yet.

Until they clear serious regulatory hurdles, Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. will operate as separate companies, meaning that any direct benefits to consumers, such as sharing programming, could be a ways off.

What’s more, their broadcasting systems aren’t compatible with each other, so to receive signals from both, you would have to buy a new kind of receiver, which is still being developed.

Sirius and XM also say they have every intention, once the deal is done, of sharing at least some programming between their lineups without the need for a new radio, provided the companies can reach the necessary deals with content providers.

That could mean a potential satellite-radio customer wouldn’t necessarily have to choose between hearing baseball games — currently available only on XM — and NFL games, which are on Sirius.

Drew Clark of the Center for Public Integrity, a Washington nonprofit that does investigative reports on government and regulatory issues, says that giving consumers a richer choice of listening options could be a good point in favor of the merger.

“Consumers now have to go through and pick the content they want, and if they want both, they have to subscribe to both,” said Mr. Clark, the organization’s project manager for telecommunications and media. If the deal is approved, he notes that they “wouldn’t have to choose between one and the other.”

At the same time, however, eliminating one of the only two competitors in a new market could hurt consumers if it leads to higher prices and less-aggressive efforts to attract listeners with programming, said Jeannine Kenney, senior policy analyst for telecommunications and media at Consumers Union.

“We would approach this with a good bit of skepticism,” she said. “This is not necessarily a clear win for consumers.”

In the meantime, both companies are going to great pains to explain that they will continue to provide full service to their existing customers — about 7.6 million for XM as of year-end, and more than 6 million for Sirius.

Sirius’ chief executive, Mel Karmazin, who will lead the new company, told analysts on a conference call yesterday that the company could consider raising subscription prices later, but only after seeing how robust the market is. Both Sirius and XM charge about $13 per month.

“We don’t want to do anything today at Sirius that’s going to slow down the adoption of more people coming to satellite radio,” Mr. Karmazin said.

For listeners, the diverse programming on satellite radio has proven to be a popular alternative to traditional terrestrial radio, which has undergone an enormous amount of consolidation in recent years, said Michael Bracy, policy director for the Future of Music Coalition, a nonprofit advocacy group for independent musicians.

“What artists and music fans want is the potential of these technologies to really grow and accelerate,” Mr. Bracy said. “XM and Sirius showed that if you offer music fans a wider diversity of music and a lot of the genres that have been eliminated from terrestrial radio, that there’s a market for that.”

Eventually, if the two companies are approved for a merger, they plan to introduce a new radio receiver that would be capable of receiving signals from both sets of satellites. However, Mr. Karmazin declined to give specific forecasts of when such units would be ready.

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