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Karmazin Questioned On Sirius/XM Merger At Senate Hearing

4/18/2007 08:35:00 AM Eastern

Washington — Several Senators and industry experts expressed skepticism that a merged Sirius/XM would be good for consumers during a Senate hearing Tuesday.

As Sirius Satellite Radio CEO Mel Karmazin presented testimony in favor of a merger before the Committee on Commerce, Science and Transportation yesterday, some Senators stated concerns that a merger would further the consolidation already taking place in the media sector.

Committee chairman Daniel K. Inouye (D-Hawaii) said he believes the “merger proponents, in this case, have a steep hill to climb,” because of “the public interest in promoting competition and maximizing diversity of media outlets.”

 
 Mel Karmazin

Vice chairman Ted Stevens (R-Alaska) said he was concerned about the impact of the merger on rural America, particularly in remote locations where no local radio broadcasts are available and satellite radio is the only option.

Similarly Gene Kimmelman, VP of Federal and International Affairs for Consumer Union, which publishes Consumer Reports, testified before the Committee claiming, “Our concern is the logic here could open a floodgate of very dangerous consolidation in the media.”

Withers Broadcasting Companies, which owns dozens of radio and TV stations, also opposed the merger while two other speakers, Gigi Sohn, president of Public Knowledge, and David Black, managing director of equity research at RBC Capital Markets, spoke in favor of it.

Sohn told the Committee, “I believe one strong company subject to conditions would best serve consumers,” and suggested that the merged company should set aside 5 percent of its capacity for non-commercial programming over which it has no control.

She also accused broadcasters of being hypocritical in their stance against the merger because that industry has undergone significant consolidation. “It is interesting that the person testifying owns 30 stations and not 300 stations,” she said in reference to Withers Broadcasting attending the hearing rather than a larger broadcaster such as Clear Channel Communications.

Sohn and legislators also discussed the possibility of requiring that a merged Sirius and XM return some of their combined 25MHz of spectrum to the government.

Broadcasting & Cable, a sister publication to TWICE, also reported yesterday that during the National Assocation of Broadcasters (NAB) convention in Las Vegas this week, NAB president David Rehr asked FCC commissioner Michael Copps what he thought of the Sirius/XM merger’s prospects. Copps said he would not prejudge the merger since it was currently before the commission, but he did point out that FCC chairman Kevin Martin had said the merger was “a significant climb” for him, and that it was a “pretty steep climb” for Copps as well.

 
 Source: Sirius Satellite Radio

Broadcasting & Cable further reported that “Copps said that there seemed to be some disconnect between NAB's argument that broadcasters did not compete with satellite radio when it came to this merger, and the argument that it was ‘one big happy competitive family’ when it came to seeking media ownership rule changes.”