Friday, March 2, 2007

Sirius CEO Mel Karmazin appeared before a newly formed Antitrust Task Force, a sub-committee of the House Judiciary Committee, on Wednesday last week in Washington, D.C. to defend the proposed U.S. merger between XM and Sirius satellite radio services.

The hearing, carried live on C-SPAN, was attended by representatives from various competing broadcast companies. The representatives challenged the merger deal, and some speakers were openly hostile to Karmazin and to satellite radio in general, while other speakers were more civil.

Several times during the debate, the discussion centered on the failed merger deal between the two satellite television networks DirecTV and Echostar. The comparison between this proposed radio merger and the failed television merger was settled to some extent with an understanding that nearly all television viewers now use either cable or satellite to view available programming. Televised programming content is now delivered mainly in the form of a subscription, rather than airwave transmissions.

Unlike television programming, most radio listeners use over the air receivers to listen to free programming content supported advertisers.

“We come to this hearing with an open mind, but we recognize that the companies have the obligation to convince the Congress, the regulators, and most importantly, the American People that this combination will improve the competitive playing field and benefit consumers,” said John Conyers, the sub-committee chairman. To determine the legality of this merger, Congress first needs to decide whether a combined XM and Sirius would be a monopoly, as the only satellite radio provider in the United States, or whether the new company will actually be in competition with other forms of radio-like entertainment, according to Conyers. The hearing focused on alternatives such as Internet radio, terrestrial radio, portable audio devices, and emerging services, such as cell phone services and WiMax.