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Karmazin Tells Senate That Broadcasters ‘Reversed Course’

Washington — Sirius Satellite Radio CEO Mel Karmazin spoke before the U.S. Senate today, presenting statistics on the various audio markets in hopes of demonstrating that a merged Sirius and XM Satellite Radio would not create a monopoly, but rather compete within a dynamic audio marketplace.

In addition, he accused broadcasters of changing their position on the nature of the market in order to fight the merger.

Karmazin said Sirius and XM account for only 3.4 percent of all radio listening according to a recent Arbitron study.

Speaking before the Senate Committee on Commerce, Science and Transportation, Karmazin said 230 million Americans listen to terrestrial AM/FM radio each week and that momentum for the deployment of HD Radio is gaining. “A year ago, there were only four or five HD-Radio models available and the lowest price was $599. Now there are 30 manufacturers of radios and price points under $200.” Karmazin said the radio industry, through the HD Digital Radio Alliance “has committed hundreds of millions of dollars to promoting this technology.”

Internet radio listeners increased 50 percent in one year, according to a 2006 Arbitron study, and now includes one in five Americans, Karmazin said.

Regarding MP3 players and iPods, Karmazin said that more than 116 million units have been sold and more than 70 percent of U.S. 2007 car models are expected to offer iPod integration.

He also cited mobile phones as a competitor to satellite radio, claiming that 23.5 million wireless subscribers own phones with integrated music players.

Karmazin also took aim at the radio broadcast industry’s recent claims that a Sirius/XM merger would constitute a monopoly. In the past, the National Association of Broadcasters stated in the context of an FCC proceeding that “local radio stations compete with … iPods and other MP3 players, music services, podcasting and the Internet streaming.” said Karmazin, noting that this statement supports Sirius and XM claims that satellite radio competes with other audio products.

Karmazin told the Senate, “In an attempt to cast doubt on the merits of a Sirius/XM merger, some broadcasters now appear to be reversing course and questioning whether satellite radio fully competes with AM/FM radio and other audio services.”

Also in his presentation, Karmazin discussed pricing options for a merged Sirius and XM service, claiming that if consumers elect to stay with their current service, they will “continue to receive substantially the same channel lineup of either Sirius or XM … at the same price — $12.95 per month.” Sirius did not clarify what it meant by “substantially” despite a TWICE inquiry.

Karmazin did say that under a Sirius/XM merger, consumers could block certain adult programming and receive a “credit.”

Finally, the Sirius CEO noted that XM and Sirius will compete with many additional technologies in the future. He mentioned Wi-Fi and WiMAX contributing to mobile phone and Internet radio services. He noted, “Other types of spectrum also are available that are capable of supporting services comparable to satellite radio. For example, audio entertainment services similar to satellite can be deployed using the frequencies allocated to the Wireless Communications Service.”