Key senator urges rejection of XM-Sirius deal

WASHINGTON (Reuters) - The chairman of the U.S. Senate’s antitrust subcommittee on Wednesday urged regulators to block Sirius Satellite Radio Inc.’s proposed acquisition of XM Satellite Radio Holdings Inc..

This combo picture shows an XM Satellite Radio unit (top) and rival Sirius Satellite Radio unit installed in separate private vehicles in Washington February 20, 2007. The chairman of the U.S. Senate's antitrust subcommittee on Wednesday urged regulators to block Sirius Satellite Radio Inc.'s proposed acquisition of XM Satellite Radio Holdings Inc. REUTERS/Jason Reed

Democratic Sen. Herb Kohl of Wisconsin said he had sent a letter to the Justice Department and the Federal Communications Commission calling on them to oppose the deal on grounds that it would cause “substantial harm to competition and consumers.”

“Such a result should be unacceptable under antitrust law and as a matter of communication policy,” Kohl wrote to FCC Chairman Kevin Martin and the Justice Department’s antitrust chief, Thomas Barnett.

Sirius plans to buy XM in an all-stock deal worth about $4 billion. The deal would combine the only two providers of satellite radio service in the United States and has sparked concerns among some U.S. lawmakers and consumer groups.

The deal is currently being reviewed by both the Justice Department and the FCC, which issued both satellite radio licenses in 1997 on the condition that the two companies would never merge.

Although they can exert political influence over the agencies generally, lawmakers have no direct input into the decisions about individual merger reviews.

In testimony before Kohl’s subcommittee and other congressional panels, Sirius Chief Executive Mel Karmazin has promised that the combined company would not raise prices, and that customers would be able to block adult channels and get a refund for those channels.

Karmazin has also argued that the deal would not be anti-competitive because satellite radio faces competition from other forms of audio like traditional AM/FM radio and personal audio players.

But in Wednesday’s letter to the agencies, Kohl said he was unconvinced. Terrestrial radio is too limited to compete with satellite radio, while personal audio players can not match the programming of satellite service, he wrote.

“No other technology available today is a substitute for the satellite radio,” Kohl wrote.

Beyond that, Kohl said, other possible alternatives are years away from being available to consumers.

“Uncertain promises of competition from new technologies tomorrow do not protect consumers from higher prices today,” Kohl wrote.