Skeptics Question XM-Sirius Merger Plan

Mel Karmazin, chief executive of Sirius Satellite Radio, appears before a House task force to explain why his company should be allowed to merge with its lone rival, District-based XM. Karmazin would head the merged company.

By Charles Babington
Washington Post Staff Writer
Thursday, March 1, 2007; D04

The nation's two satellite-radio companies promised yesterday to refrain from raising prices, for a time at least, if they are allowed to merge. But some lawmakers and consumer groups appeared dubious.

Mel Karmazin, chief executive of Sirius Satellite Radio, told the House Judiciary Committee's antitrust task force that consumers would benefit if the government allowed his company to merge with rival XM Satellite Radio Holdings. "We are committed to not raising prices, and we are committed to lowering prices," said Karmazin, who would be chief executive of the new company.

The panel's chairman, Rep. John Conyers Jr. (D-Mich.), responded: "How do we enforce promises? . . . 'Trust me' isn't going to work here."

Karmazin said Sirius and XM might accept conditions if the Federal Communications Commission and Justice Department were to approve the merger. But he declined to say how long they might agree to cap subscription prices, now set at $12.95 a month by both companies. XM and Sirius have said a merged company would offer various levels of content, presumably at varying prices, but they have declined to provide details.

Owners of free, over-the-air radio stations strongly oppose the merger, and the president of their association sharply challenged Karmazin at the hearing. The government cannot trust XM's and Sirius's promises, "given their long track record of breaking FCC rules," including causing signal interference with local radio stations, said David K. Rehr, president of the National Association of Broadcasters.