- The Washington Times - Wednesday, February 28, 2007

Federal lawmakers, kicking off their probe of the proposed $13 billion merger of rivals XM Satellite Radio Inc. and Sirius Satellite Radio Inc., yesterday quizzed both Sirius Chief Executive Mel Karmazin and one of the deal’s most vocal opponents.

“We’ve come to this hearing with an open mind, but we also recognize that the companies have the obligation to convince Congress, regulators and most importantly, the American people that this combination will improve the competitive playing field and benefit consumers,” said House Judiciary Chairman John Conyers Jr., Michigan Democrat.

The proposed XM-Sirius marriage faces regulatory scrutiny from both the Justice Department and the Federal Communications Commission. Yesterday’s hearing was held before a new Judiciary Committee Antitrust Task Force established earlier this week to look at the deal and other antitrust issues.

Mr. Karmazin made the case for merging the two companies, arguing that times have changed since the competitors received their licenses from the FCC in 1997.

“Consumers will get more choice, lower prices and the ability to have less confusion and more content,” he said.

Mr. Karmazin said a combined entity would be open to government-imposed conditions, including an agreement not to raise subscription prices for a certain period of time.

“If in order to get the deal done we have to make a concession, we’re prepared to make a concession,” he said.

But David Rehr, president of the National Association of Broadcasters and an outspoken critic of the deal, said the merger would create a “government-sanctioned monopoly.”

“Two companies that have a pattern and practice of violating their FCC licenses cannot be trusted with monopoly power,” said Mr. Rehr, whose organization represents traditional AM/FM radio stations.

The hearing, like the regulatory reviews to come, largely turned on which services compete with District-based XM and Sirius of New York.

Supporters of the deal define the market widely to include traditional terrestrial radio, IPods, high-definition radio, Internet radio and cell phones that stream music.

Opponents say satellite radio is unique, and that the two companies price their services based on competition with each other.

“Right now, we don’t have all the facts necessary to determine the legality of the merger,” said antitrust analyst Charles Biggio, the only person to testify who did not take a position on the deal.

“My recommendation is that no firm conclusions be formed about this merger until the agencies have done their review.”

Most members of the antitrust panel said they were approaching the merger with an open mind. However, proponents of the deal found allies in Rep. Rick Boucher, Virginia Democrat, who supports its approval, and Rep. Anthony Weiner, New York Democrat, who said to describe the merger as giving rise to a monopoly has “no foundation in the realities of the world today.”

“Sometimes mergers serve to help an industry and help choice move forward,” Mr. Weiner said.

The hearing also featured testimony from the Consumer Federation of America, which opposes the deal, and the digital rights group Public Knowledge, which supports it with conditions.

The XM-Sirius deal will be the subject of a congressional hearing next week before the House Energy and Commerce telecommunications and the Internet subcommittee.

The companies, which announced their deal last week, expect it to be approved by the end of the year.


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