Research firm argues against Sirius-XM deal

This combo picture shows an XM Satellite Radio unit (top) and Sirius Satellite Radio unit installed in separate private vehicles in Washington February 20, 2007. Influential research firm Carmel Group argued against a planned merger between Sirius and XM in a new report sponsored by the National Association of Broadcasters. REUTERS/Jason Reed

NEW YORK (Reuters) - Influential research firm Carmel Group argued against a planned merger between Sirius Satellite Radio Inc. SIRI.O and XM Satellite Radio Holdings Inc. XMSR.O in a report sponsored by the National Association of Broadcasters.

The report, issued on Tuesday, said a combination of the two satellite radio providers would result in “less service, less affordability, less diversity and less choice in content and hardware.”

The National Association of Broadcasters represents local broadcast radio stations that oppose the merger of Sirius and XM, with which they compete.

The Carmel Group is credited for having lent arguments to U.S. regulators' rejection of a 2002 merger plan between satellite television providers EchoStar Communications Corp. DISH.O and DirecTV Group Inc. DTV.N

XM and Sirius fired back. “The NAB and its members say one thing when they try to block the Sirius-XM merger but something entirely different when (NAB Chief Executive) David Rehr speaks to the National Press Club, Clear Channel speaks to its investors, or the HD radio alliance boasts about its advantages on its website,” the companies said in a joint statement.

They added, The “NAB opposed the creation of satellite radio fearing that it would compete with terrestrial radio, so it’s no surprise that it’s producing biased ‘studies’ hostile to the Sirius-XM merger by NAB-paid consultants.”

Sirius shares closed down 6 cents, or nearly 2 percent, at $3.09. XM shares fell 25 cents, or 2 percent, to $12.14 on Nasdaq.

The report also included a “ping pong” chart of retail promotions and other moves that Sirius and XM took to compete with each other, to support the argument that their competition forced improvements in service, choice and pricing.

Sirius chief executive Mel Karmazin has promised lawmakers reviewing the deal that the combined company would not raise prices. The deal requires approval from the U.S. Justice Department’s antitrust office as well as the Federal Communications Commission.