Sirius and XM Offer New Price Plans to Sweeten Merger Pill

25 July 2007

WASHINGTON DC: Sirius Satellite Radio ceo Mel Karmazin has dangled the carrot of à la carte programming and lower prices as he tries to convince US lawmakers that a merger between his company and rival XM would be good for consumers.

The $4.7 billion (€3.52bn; £2.38bn) deal, agreed between the two in February, is under scrutiny by the US Justice Department and advocacy groups, wary of the monopoly that would be created.

Karmazin's latest sweetener is to offer two à la carte monthly plans: one providing the best premium services currently aired by each company for a fee of $14.99; the other priced at $6.99 would allow a choice from fifty of the non-premium channels at an additional cost of 25 cents a channel.

But both options would require the purchase of new radio equipment.

Media watchdog, the Federal Communications Commission's desire to muffle 'indecent' output, has also been addressed by the radio companies.

They undertake to let listeners select 'family friendly' and other rate plans and give subscribers $1 per month credit if they opt to have 'adult content' stations blocked.

Avers Karmazin: "We need to build the subscription business base of satellite radio to strengthen our business and better leverage our high fixed costs. We are confident that a lower price point (and) more programming choices will help us do just that."

He added in a speech to the Press Club: "Some argue that a merged company would have incentives to raise prices, but that argument also falls flat, given that our largest and most potent competitor is terrestrial radio, and that's for free."

But National Association of Broadcasters spokesman Dennis Wharton warned: "Policymakers should not be hoodwinked . . . The history of antitrust law demonstrates that two hotly competitive companies will promise anything to become a monopoly."

Data sourced from New York Times; additional content by WARC staff