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March 22, 2007

XM and Sirius submit FCC transfer request

XM and Sirius submit FCC transfer request

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Thursday, March 22, 2007


Today, the satellite radio providers XM Satellite Radio and Sirius Satellite Radio submitted a joint application to transfer control of their ground and space-based transmitters to the new, merged company. This is a major step for the XM/Sirius merger deal, as FCC approval represents a major hurdle for the merger. This document also answers some questions that have plagued subscribers of both services.

While there is not much information for the casual listener, two of the most frequently asked questions have been addressed, at least in part:

Pricing has been clarified, to some exeent. From the FCC filing: “After the merger, customers may elect to receive fewer channels at a monthly price lower than $12.95; substantially similar programming at the existing $12.95 price; or more channels, including some of the ‘best of both’ networks, at a modest premium to the cost of one service, and considerably less than the cost of subscribing to both services.” The document goes on to explain that channel blocking will be available, and that credit will be given for blocked channels.

The filing also addresses the potential need for new receivers. “Subscribers could continue to use their existing radios or eventually purchase new radios capable of receiving all of the content of both services when they become available.” Apparently, some programming will be available on both networks, but this will be limited. To get the full range of programming, subscribers will need new equipment.

Another major stumbling block for the merger deal is the potential for monopoly. To counter the arguments that the merged company will become a monopoly, the document goes on to describe the nature of satellite radio’s competition: HD radio, Internet radio, AM and FM radio, portable media players, mobile phones, and even CD players. “It is clear that all of the above providers view themselves as being in direct competition with each other,” the document alleges, and then goes on to quote statements by the National Association of Broadcasters in support of this assertion. “local radio stations compete for listeners with other forms of audio delivery offering an almost unlimited array of content. IPods and other MP3 players, music [subscription] services, podcasting and the Internet streaming of U.S. and foreign radio stations literally provide content from around the world to listeners in each local radio market in America.”

As this is only the first step in the FCC process, and the FCC is only one of three major steps in the merger process, the deal is far from over. However, convincing the FCC that the merger should happen will remove a major barrier in the companies’ efforts.


XM Satellite Radio and Sirius Satellite Radio. “CONSOLIDATED APPLICATION FOR AUTHORITY TO TRANSFER CONTROL” — March 20, 2007, March 20, 2007

This text comes from Wikinews. Permission is granted to copy, distribute and/or modify this document under the terms of the Creative Commons Attribution 2.5 licence. For a complete list of contributors for this article, visit the corresponding history entry on Wikinews.

March 2, 2007

Sirius CEO visits congress

Sirius CEO visits congress – Wikinews, the free news source

Sirius CEO visits congress

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Friday, March 2, 2007

Sirius CEO Mel Karmazin appeared before a newly formed Antitrust Task Force, a sub-committee of the House Judiciary Committee, on Wednesday last week in Washington, D.C. to defend the proposed U.S. merger between XM and Sirius satellite radio services.

The Sirius Logo

The hearing, carried live on C-SPAN, was attended by representatives from various competing broadcast companies. The representatives challenged the merger deal, and some speakers were openly hostile to Karmazin and to satellite radio in general, while other speakers were more civil.

Several times during the debate, the discussion centered on the failed merger deal between the two satellite television networks DirecTV and Echostar. The comparison between this proposed radio merger and the failed television merger was settled to some extent with an understanding that nearly all television viewers now use either cable or satellite to view available programming. Televised programming content is now delivered mainly in the form of a subscription, rather than airwave transmissions.

Unlike television programming, most radio listeners use over the air receivers to listen to free programming content supported advertisers.

“We come to this hearing with an open mind, but we recognize that the companies have the obligation to convince the Congress, the regulators, and most importantly, the American People that this combination will improve the competitive playing field and benefit consumers,” said John Conyers, the sub-committee chairman. To determine the legality of this merger, Congress first needs to decide whether a combined XM and Sirius would be a monopoly, as the only satellite radio provider in the United States, or whether the new company will actually be in competition with other forms of radio-like entertainment, according to Conyers. The hearing focused on alternatives such as Internet radio, terrestrial radio, portable audio devices, and emerging services, such as cell phone services and WiMax.

The Issue

At the heart of the debate is whether the two competing satellite services could drive each other to improve both of their services, or whether the proposed merger could result in end-user cost reductions by making more money available for Research & Development, new content, and subscription price reductions.


David Rehr

David Rehr, president of the National Association of Broadcasters, spoke first. In a speech riddled with loaded terms like “government sanctioned monopoly” and “government bailout”, he laid out points:

  1. This merger would create a government sanctioned monopoly.
  2. This government sanctioned monopoly would violate FCC rules and precedent (DirectTV and Echostar), Congressional rules, and anti-trust principles.
  3. This government sanctioned monopoly would undermine competition
  4. Both companies have a pattern of violating the terms of the FCC licenses and can’t be trusted.
  5. XM and Sirius are not failing companies and should not receive a government bailout.

Rerh accused Sirius and XM of breaking promises and asserted that neither company can be trusted. To trust the new, combined company would be stupid, he alleged.

Gigi Sohn

Gigi Sohn of Public Knowledge presented a more balanced view. On one hand, consolidation will raise questions about price and choice. On the other hand, XM and Sirius have engaged in a spending war, harming both companies financially. She also proposed conditions to protect consumer choice, such as public radio and educational programming requirements. Touching on the Recording Industry Association of America lawsuit, she also stated that consumers should be allowed to record programming.

Mark Cooper

Mark Cooper spoke on behalf of the Consumer Federation of America. “We have not given up on competition,” Cooper said. Like David Rehr, he pointed out the restriction by the Federal Communications Commission (FCC) against merging the two licenses. He believed the distinction between satellite and terrestrial radio makes satellite a unique market, where satellite radio is mobile and nationwide, and is not content-regulated. He also touched on the conditions of entry into the FCC market, “Four is few and six is many, we only have two in this market.”

Cooper also brought up “inter-modal competition” (competition between services that offer similar, but not the same products.) According to him, inter-modal competition has a poor track record of keeping down costs and increasing product quality.

Cooper was extremely outspoken against a “regulated monopoly”, and said “consumers are better served by competition.”

Charles Biggio

Charles Biggio has a history in anti-trust regulation. He advocating finding more facts regarding the merger. His argument focused around Section 7 of the Clayton Act (see section 18.) Unlike other speakers, he did not have an agenda to pursue, but rather spoke specifically on government regulations.

Mel Karmazin

Mel Karmazin spoke on behalf of both XM and Sirius. Karmazin made several points and promises:

  1. The price will not go up. At the beginning that was implied, but by the end of the meeting he made a promise that the price of the XM and Sirius service will not be raised over the current $12.95 a month mark, and will probably go down as tiered products are introduced.
  2. The merger was willing to comply with any reasonable restrictions placed on the new company.
  3. Consumers would not need to switch to new radios. A unified receiver has been developed, and he has one sitting in his office right now. This receiver can’t be produced now because of the cost: no manufacturer wants to touch it becaus of the lack of subsidization by XM or Sirius; it would not be reasonable to expect one company to subsidize the manufacture a radio that might not result in a subscription to that company’s product.
  4. XM and Sirius satellite radio compete with the IPod, local stations, WiMax, cell phones, and Internet radio.
  5. Sirius could provide tiered service, however the technology is not in place to allow customers to pick and choose individual channels.

Other monopolies

Howard Berman (D-California 28th District) made a profound remark: “As I listen to Mr. Rehr’s testimony, and when he was talking about merged entities that controlled many radio markets, I thought for a second he was talking about ClearChannel.” The media company ClearChannel holds a considerable stake in the broadcast bandwidth in the United States.


House Representative Sheila Jackson Lee (D-Texas) asked about diversity, wondering how the new company would create opportunites for minority ownership and minority involvement in the company’s broadcasting?

Karmazin responded that Sirius and XM have several channels aimed at the African American community: music, entertainment, and talk channels. He noted that each network also carries Spanish-language channels.

To the impression that the combined stations would provide for minority-oriented programming, Karmazin explained that news and talk feeds were simply picked up from existing TV and radio networks, which left Rep Lee apparently unconvinced that their interests would be served.


As a debate, this session did not definitevly resolve any issues, and more debate will be necessary. However, it did reveal some interesting facts and motivations:

  1. The National Association of Broadcasters (NAB) is going to fight this merger tooth and nail.
  2. Sirius and XM will both operate as they do currently for the foreseeable future. Both XM and Sirius radios will continue to receive their existing channels, in addition to new content carried over from the other network.
  3. If the merger does go through, there may be additional requirements, such as educational programming and price controls.
  4. XM and Sirius can be said to compete with other media outlets, such as terrestrial radio and portable audio devices.
    1. The NAB’s presence at the meeting seems to contradict their monopoly claims. While the NAB claims that the merger would create a monopoly, they act as if it won’t: the satellite network will be competing with NAB stations.
    2. Based on an Arbitron report, a satellite radio listener actually listens to more terrestrial radio than a non-satellite radio listener: 14 hours of terrestrial radio for 10 hours of satellite.
    3. Emerging technologies exist that will increase the competition in the marketplace: cell phones can now download songs and news. Podcasting is on the rise. Internet radio is more popular than ever.
  5. At this point, most of the panel members did not want to hear “trust me” from Karmazin. They wanted some other form of assurance.
  6. If the companies do indeed form a monopoly, the cost of entry for new competitors is high.
  7. Nobody knows whether approving or denying the meger will save or destroy satellite radio.

The merger faces more lobbying and politicizing of this issue as the proposal moves forward.


Paul R. La Monica. “Sirius and XM get grilled in Congress” — CNN Money, February 28, 2007

C-SPAN “House Committe Hearing on the XM and Sirius merger (Real Player webcast)” February 28, 2007

rtsp:// (Real Player stream)


This text comes from Wikinews. Permission is granted to copy, distribute and/or modify this document under the terms of the Creative Commons Attribution 2.5 licence. For a complete list of contributors for this article, visit the corresponding history entry on Wikinews.

February 24, 2007

XM and Sirius announce merger deal

XM and Sirius announce merger deal – Wikinews, the free news source

XM and Sirius announce merger deal

From Wikinews, the free news source you can write!
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Saturday, February 24, 2007

On 19 February 2007, XM Satellite Radio and Sirius Satellite Radio announced a move that will change the face of satellite radio in the United States and Canada: XM and Sirius will be merging, creating a single satellite radio provider.

Multi-million dollar losses, combined with increasing competition from internet radio, downloadable music, and HD radio were factors in this merger.

Wikipedia has more about this subject:
XM/Sirius merger

Mel Karmazin, CEO of Sirius Satellite Radio, described the problem: “We don’t want to take subscribers from XM. We won’t make money that way. We need new subscribers.” Likewise, XM executives say they can’t succeed by stealing Sirius subscribers. This leaves both companies with the problem of attracting new customers and distinguishing their brand, while at the same time trying to convince potential customers to pay $12.95 a month for radio, something that people are used to getting for free. Even if one company were to force the other out of the marketplace, the remaining company would have won a Pyrrhic victory, without enough capital remaining to take advantage of the situation.

The solution: make a deal now, while both companies are both strong and in a position to expand their technologies and services. That’s exactly what they plan to do: In press releases and news postings on both of their web sites, both companies have pledged to make the combined company better than either service by itself. “You’ve heard of 1+1=3,” Karmazin said during an invester conference call, “that’s what this is.”

Pending approval of the deal, each share of XM stock will be replaced with 4.6 shares of Sirius. Each company’s stockholders will retain approximately 50% of the joined company. Sirius CEO Mel Karmazin will retain his CEO title in the new company, and XM chairman Gary Parsons will retain his. XM CEO Hugh Panero will retain his position until the merger is complete, which should happen near the end of 2007.

Timeline of events

February 21, 2007

  • US Representative Bob Goodlatte (R-Va) is calling for a hearing on the merger.

February 20, 2007

  • A public conference call between XM and Sirius occurred on Feb 20, 2007 at 8:30AM EST. A PDF presentation of the call is available here. The webcast is currently available at the Sirius Investor Site.


Several consumer and community groups have come out in opposition to the merge.

  • In a strongly worded press release on February 19, 2007, the National Association of Broadcasters decried the plan, stating that the merger would create a monopoly in the United States satellite radio market.
  • A group of law students formed an organization known as the Consumer Coalition for Competition in Satellite Radio, with the purpose of stopping the merger. The C3SR is composed of law students, all of whom subscribe to XM or Sirius Satellite Radio. Their major argument is that this would create a monopoly in the satellite radio, which would increase prices, reduce consumer choice, and subsidize unwanted services. Chris Reale, a founder of C3SR, said “If this merger is permitted to go forward, there will be no protection of competition and there will be no competitors.”


In the initial merger press release, Sirius and XM asserted that satellite radio is part of the audio entertainment industry rather than an industry of its own, and as such competes with traditional terrestrial radio, HD Radio, iPods and on-line radio. The resultant company will be subject to regulation pre- and post-merger by the FCC, Federal Trade Commission, Securities and Exchange Commission, Department of Justice and possibly other federal organizations. The FCC has issued a statement saying that a merger is not without its hurdles, and that they will want assurances that price, quality, and consumer choice will be protected.

Based on C3SR’s blog posts and Internet forum posts on various fan sites, it is apparent that many subscribers are looking forward to the deal. Speculation abounds on what the new receivers will look like, and how customers’ existing hardware will fit in to the new plan.

While many of the facts concerning the merger are not yet known: what the new company will be called, exactly which programming the new company will carry, and when customers will need to upgrade their hardware, one thing is for certain: Satellite radio in North America is in for one big change.

Further reading

We will follow the progress of the merger in In depth: XM and Sirius merger. Check back often to see the latest news.


External links

This text comes from Wikinews. Permission is granted to copy, distribute and/or modify this document under the terms of the Creative Commons Attribution 2.5 licence. For a complete list of contributors for this article, visit the corresponding history entry on Wikinews.

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