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Karmazin "Clarifies" XM-Sirius Merger Plans

More Room for Family Friendly & Religious Programs, He Claims

By Joseph S. Enoch and Martin H. Bosworth
ConsumerAffairs.com

July 23, 2007 

Karmazin, who would become CEO of the combined companies, released more detailed programming packages and prices in an appearance before the National Press Club in Washington, D.C. The companies will file comments with the Federal Communications Commission tomorrow.

The merger's main opponent, the National Association of Broadcasters (NAB), which represents terrestrial AM and FM stations, argued at Congressional hearings that the combined companies would not be able to offer both XM and Sirius broadcasts without a consumer owning both companies' receivers.

The companies say they plan to sell a new receiver for customers who wish to pick one of the two proposed a la carte options.

The first option would allow consumers to pick 50 channels from either XM or Sirius for $6 per month and $.25 for each additional channel and does not allow consumers from one service to pick channels from another. To do that they need the second a la carte option which allows consumers to choose 100 channels from either XM or Sirius and some “select” channels from the other provider, Karmazin said.

When ConsumerAffairs.com asked Karmazin if consumers who want to switch to one of the new receivers will get a refund he said that it “could conceivably be an option.”

For Sirius consumers who don't want to buy a new receiver, they would be able to choose from some preselected packages that include:

• Sirius Everything: Sirius' current package which includes 130 channels and will cost the same $12.95 per month.
• Sirius Everything and Select XM: Sirius' entire package plus 10 “selected” XM channels for $16.99 per month.
• Family Friendly: 120 channels of filtered content with 10 select XM channels for $14.99 per month or $12.95 per month minus XM's content.
• Family Friendly & Select XM: Family Friendly lineup plus 10 selected XM channels for $14.99 per month.
• Mostly music: 65 music channels including family friendly, religious and emergency content for $9.99 per month. News, Sports & Talk: a collection of 50 channels that are everything but music for $9.99 per month.

XM would offer similar packages:

• XM Everything and XM Everything & Select Sirius: XM's 170 channels for the same $12.95 per month or all those channels plus 10 selected Sirius channels for $16.99 per month.
• Family Friendly and Family Friendly & Select Sirius: 170 filtered channels for $11.95 per month or that same lineup plus 10 selected Sirius channels for $14.99 per month.
• Mostly music: 65 music channels including family friendly, religious and emergency content for $9.99 per month.
• News, Sports & Talk: a collection of 50 channels that are everything but music for $9.99 per month.

Consumers can filter the adult content from the “everything” packages for a $1 monthly fee according to a Sirius press release.

Karmazin did not go into details on what the “selected” channels might be and whether a consumer would be able to get both major league baseball and National Football League games, or both Howard Stern and Oprah on a typical XM or Sirius receiver, as he had promised at Senate and House Congressional hearings months ago.

Sirius and XM representatives did not return phone calls seeking clarification today.

The Federal Communications Commission ultimately decides the fate of the proposed merger and although Karmazin would not speculate on how the agency will react to the “consumer friendly” a la carte proposal, a Sirius and XM press release stated, “The companies anticipate the merger will close in late 2007.”

According to press materials, both "a la carte" plans would require subscribers to use "next generation" receivers and make their channel selections via the Internet.

"No consumer will pay more than what they pay now," Karmazin said. XM Chairman Gary Parsons agreed, saying in a press statement that "the merger would enable us to deliver more choices and lower prices for consumers."

Playing Politics

It's unclear how the XM-Sirius merger will fare before the FCC and antitrust regulators, and further complications may come from a skeptical Congress. Karmazin had earlier proposed "a la carte" programming tiers as a condition of the merger in testimony before the Senate.

The "a la carte" and "family friendly" packages may be interpreted as a move to placate FCC chairman Kevin Martin, who has long championed < similar program offerings for cable television in order to please conservative groups. Although Martin's push for "a la carte" never made much of an impact, many cable companies began offering "family friendly" tiers of programming of their own accord.

Karmazin today pledged the merger would create increased room for religious programming on both XM and Sirius, referencing the recent endorsement of the merger by Edward Cardinal Egan, archbishop of New York. The archbishop said the merger would grant Sirius' Catholic Channel a wider audience.

Even with the combined power of both stations, the merged company would still only command 3.4 percent of the radio audience, according to Karmazin. "Terrestrial radio is still the 800-pound gorilla in the room," he said, taking time to criticize the National Association of Broadcasters (NAB) and the ClearChannel media conglomerate for opposing the merger.

"The NAB doesn't oppose this merger because it will limit competition," Karmazin said. "They oppose it because they want to limit their competition."

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