Eleven States Urge Conditions On Sat Merger
March 28, 2008 at 5:37 AM (PT)
Eleven states urged U.S. communications regulators to consider imposing conditions on SIRIUS SATELLITE RADIO's proposed $4.59 billion takeover of XM SATELLITE RADIO, reports BLOOMBERG NEWS. The attorneys general of the states, led by Democrat MARC DANN of OHIO, said they are "disappointed" that the U.S. Justice Department cleared the deal on MARCH 24th without restrictions. The states said the combination of the only two satellite radio providers is "anticompetitive," and the government should demand concessions.
The states said the combination of the only two satellite radio providers is anticompetitive, and the government should demand concessions.
Allowing the merger to proceed "unchallenged or without the imposition of appropriate terms and conditions" hurts competition, the attorneys general said in a letter to FCC Chairman KEVIN MARTIN. They said one possible condition to protect competition would require the companies to market a receiver enabling consumers to listen to any new satellite service that is developed.
Also, they said government could require the merged company to offer "a la carte" pricing to let listeners choose among program options instead of paying full price for all channels. SIRIUS has already told the FCC it would be willing to offer that choice to consumers.
SIRIUS CEO MEL KARMAZIN outlined "a la carte" pricing as an inducement to win U.S. approval of the combination. Customers would pay as little as $6.99 a month for a package of fewer channels compared with the monthly subscription of $12.95 they now pay.
As a condition of licensing the satellite spectra to SIRIUS and XM SATELLITE, the FCC required the companies to design a radio that would receive signals from both services. such a radio thus far hasn't been economically viable because "there hasn't been anyone who wants to bring it to market," said ROBERT L. PETTIT, a Washington communications lawyer representing SIRIUS.
Still, KARMAZIN pledged last year to subsidize the production of an interoperable radio to serve customers of the combined company, PETTIT said. He acknowledged that customers who already have SIRIUS or XM SATELLITE radios installed in their cars won't be able to receive the full range of programming without new equipment.
In addition to DANN, the letter to the FCC was signed by attorneys general from CONNECTICUT, IOWA, MARYLAND, MISSISSIPPI, MISSOURI, NEVADA, OKLAHOMA, RHODE ISLAND, UTAH and WASHINGTON.