Sirius CEO pitches US lawmakers again on XM merger
WASHINGTON/NEW YORK (Reuters) - Sirius Satellite Radio Inc.'s Chief Executive appeared before skeptical U.S. lawmakers on Capitol Hill on Tuesday aiming to convince them that the company's merger with XM Satellite Radio Holdings Inc. would be good for consumers.
Sirius' Mel Karmazin, speaking before the U.S. Senate Commerce committee, reiterated the argument he has made in several Congressional hearings that combining the two companies would give customers more choices and, in some cases, lower monthly subscription prices.
"The merger will allow us to lower prices," he said. "Consumers who want fewer channels than currently offered will be able to select one or more packages of channels for less than $12.95 per month."
Sirius plans to buy XM in an all-stock deal that was worth $4.6 billion when it was announced in February. The deal has been criticized by some lawmakers and consumer groups as anti-competitive, with some concerned that prices for a combined service will rise.
The satellite radio combination would bring entertainers such as Oprah Winfrey and shock-jock Howard Stern under one roof, and give customers a nationwide radio service boasting music, talk and a range of professional sports programming.
To win approval, XM and Sirius must convince the U.S. Federal Communications Commission to waive a key regulation and persuade the Justice Department that prices would be kept in check.
Lawmakers in Congress do not have authority to block mergers, but often hold hearings to air concerns about major deals.
At Tuesday's hearing, Karmazin repeated promises that the company would not raise prices, and that customers would be able to block adult channels and get a refund for those channels.
But several senators questioned the notion that reducing the number of players in the satellite radio business would benefit consumers.
"The proposed merger ... cannot possibly be in the interest of American consumers," said Democratic Sen. Byron Dorgan of North Dakota. "It will eliminate the competition that exists between the two separate companies and it will injure consumers. This isn't even a close call."
Experts say the proposed deal may test the limits of how much industry consolidation the business-friendly Bush administration is willing to permit.
At the hearing, broadcast over the Internet, Gene Kimmelman, a vice president of Consumers Union, also spoke in opposition to the deal, saying it may lead to further consolidation of media outlets in the hands of a few dominant players.
Shares of XM rose 2.3 percent to $12.14 in afternoon trading, while Sirius shares were up .66 percent to $3.06.
