Sirius, XM Propose Sub-$12.95 Service Plan
By Amy Gilroy -- TWICE, 3/26/2007
WASHINGTON — Sirius and XM would offer a lower-priced service option if their merger were permitted, the companies said in a Federal Communications Commission (FCC) filing.
"After the merger, customers may elect to receive fewer channels at a monthly price lower than $12.95," the filing said, adding "substantially similar programming at the existing $12.95 price," and they could receive more channels "including some of the 'best of both' networks, at a modest premium to the cost of one service."
Consumer could also block adult-themed channels and receive a price credit for those channels.
The statements were part of the companies' 60-page application to the FCC for authority to transfer control of the FCC licenses held by Sirius, XM and their subsidies in order to allow a merger.
It outlined consumer benefits of a merger, claiming the new company eventually "will be able to consolidate much redundant programming," which will free capacity for new programming, including that "aimed at minority and underserved populations" and that related to "public safety and homeland security."
Eventually, interoperable radios will be offered to create a fourth service option that will combine programming from both services for "significantly less than $25.90," the filing stated.
The filing also addressed the FCC's existing rules on a merger. While the FCC stated in the past that "one licensee will not be permitted to acquire control of the other remaining satellite DARS license," it noted, "this language was not codified in the Code of Federal Regulations and thus is not a binding FCC regulation," but is "merely a policy statement reflecting the Commission's view, based on the evidence available in 1997."
It also noted, the merger would reduce operational costs, which amounted to $3.4 billion in 2006 for XM and Sirius combined. Analysts predict the merged company will save $200 to $400 million per year in the near term and several billion dollars in the long term, a savings which the companies promise to share with customers "immediately and in the long term," according to the filing.
