Sirius faces second House hearing on XM deal

WASHINGTON (Reuters) - Sirius Satellite Radio Inc.'s (SIRI.O) chief executive will defend the company's plan to purchase XM Satellite Radio Holdings Inc. XMSR.O at a House telecommunications panel hearing on Wednesday.

The deal, announced just over two weeks ago, has already been aired at a House Judiciary Committee antitrust task force hearing. Sirius CEO Mel Karmazin told lawmakers at that session he was ready to make concessions such as capping consumer prices for a period of time.

In an interview on Tuesday, the chief financial officer of Sirius reiterated Karmazin's assertion that Sirius and XM are competing with a free product, traditional AM/FM radio.

"We are competing with a free product, so while we may adjust pricing, competing with free is a very very difficult thing to do," David Frear told Reuters.

"Mel made the statement that we would not raise prices for existing services and that we could offer lower prices."

Frear said the companies will file antitrust documents with the Justice Department within a few weeks and will be working on filing the merger application with the Federal Communications Commission shortly thereafter.

The two companies will have to convince the FCC to waive an existing rule that prohibits one company from holding the only two satellite radio licenses. The deal will also have to win approval from the Justice Department's antitrust division.

The proposed merger does not need approval from lawmakers, but they could pressure the FCC and the Justice Department.

"I think this proposed merger, more than any merger in recent memory will turn on very specific facts and analysis that have not been revealed," said Blair Levin, an analyst with Stifel Nicolaus.

"I think these hearings are useful for raising a lot of issues, I don't think anyone has access to the kind of information that can really tell you in what way the debate is going."

Sirius and XM say a merger will not hurt consumers because satellite radio, which charges a subscription fee, faces competition from other forms of audio like podcasts, free over- the-air radio and personal audio players.

"We are going to be offering more choices at better prices, we think both low prices and more choices are in the public interest," Frear said.

Opposition to the deal comes from the National Association of Broadcasters, which says the companies are trying to become a government-sanctioned monopoly, and from some lawmakers, who question whether consumers will face higher prices and obsolete equipment.

The telecommunications subcommittee will also hear testimony from Greater Media Inc., a privately-held company that owns a group of radio stations, Consumers Union and digital media company RealNetworks (RNWK.O).