Karmazin Agrees To Concessions For Merger
By Amy Gilroy -- TWICE, 3/1/2007
Washington — Sirius CEO Mel Karmazin told regulators yesterday he would not raise subscription prices for a merged XM-Sirius company and would be willing to work with regulators in restricting price and other satellite radio features.
When pressed at a House Judiciary Committee yesterday, Karmazin said, “We would be willing to agree on restrictions on pricing for a given period of time. We need to show you and others that this merger is in the public interest.”
When asked if he would agree not to compete with local news and weather broadcasting and Karmazin said, “We think we’d be open to lots of things.”
Detractors on the committee however, implied that Karmazin would be willing to promise anything to “get his merger.”
Karmazin also promised regulators that any current radio would not be obsolete and would work with the new service.
One public interest group recommended that any merged satellite radio company not be allowed to raise prices for three years after the merger, allow some à la carte choice of programming by subscribers and that 5 percent of its capacity be set aside for educational and non-commercial programming, as stated by Gigi Sohn president of Public Knowledge, a public interest group.
Republican Rick Boucher said that if Karmazin was willing to accept Sohn’s proposal, the merger might have a good chance of passing.
Chairman of the House Judiciary Committee John Conyers (D-Mich.) said the key to approval of the merger rests on defining the overall market where satellite radio competes.
It must determine “whether the relevant market for satellite radio includes all forms of digital music or just satellite radio companies. The full digital audio market is estimated at $12 billion and it includes more than 230 million radio listeners and 15 million Internet radio listeners, more than 100 million iPods and 14 million satellite radio listeners.”
-
It''s not as if Sirius/XM have pretended that isn''t the intention. At the very first press conference after the merger announcement they admitted that their current inability to get a "bigger share" of the radio advertising pie is a major factor in the merger.
You don''t have to be rocket scientist to realize that the "inability" is caused by good old-fashioned competitive fear -- if one of them started larding their music programs with the standard 22 minutes of ads per hours, millions of subscribers would migrate to the other one.
Once they have their monopoly, the ad-free music will disappear and many people will toss the radio out the car window and go back to their CD changers. But many won''t and the double dipping -- selling subscriptions and ads -- will more than make up for the loss in subscribers.
The question before Congress and the FCC should be this: Name one time, place and industry where a private monopoly has offered lower rates and more services to consumers than a competitive business environment?
Sure they can say they''re going maintain prices and offer a la carte channels. The translation for that is that the basic subscription price will stay the same and you''ll get one-third the number of channels you get now for it. If you want more, you pay more. Take a look at DirecTV and Dish Nets tiers if you want to see how expensively that''s going to work.
Bottomline line is, that consumer always -- ALWAYS -- loses when a monopoly rules an industry.
Since no one now alive can remember what phone bills were like when a monopoly ruled landlines, try to remember what it was like when only two or three companies competed in the cell phone business.
Opening the bill was frequently a great occasion to contemplate the wisdom of suicide, what with the hundreds, sometimes thousands, of dollars in surprise roaming, premium time, long distance and excess minute charges.
Now that there is rampant competition, you can get a thousand or 1500 minutes for $49 or $59 and virtually no one pays for long distance and roaming anymore.
Suggestion: Email your congressman and suggest you''ll nominate him or her for early retirement if the open skies of satellite radio are allowed to become one oligarch''s private playground.
