XM, Sirius make new pitch for merger

WASHINGTON — The top executives at the nation’s two satellite radio companies detailed pricing plans Monday that they said would let customers choose which channels they want to receive if the two firms are permitted to merge.

XM Satellite Radio and Sirius Satellite Radio announced the $4.7 billion merger last February. The combination requires approval from antitrust regulators and the Federal Communications Commission.

The pricing plans announced Monday range from $6.99 per month for 50 channels offered by one service to $16.99 per month where customers would keep their existing service, plus “chose from the best” of channels offered by the other service.

That means a customer could subscribe to both the Major League Baseball channel on XM and the National Football League channel offered by Sirius, on the same radio.

Currently, the price of a monthly subscription for both companies is $12.95 and there is no channel choice, or “a la carte” option.

A combination of Sirius and XM, which broadcast to a combined 14 million subscribers, faces steep regulatory challenges, however. When the companies received their licenses from the FCC to begin offering subscription radio service via satellite, they agreed not to merge.

The companies must prove to the Justice Department that the deal is not anticompetitive. They must also prove to the FCC that a merger would be in the best interest of the public, which owns the airwaves the two companies use to deliver their signals.

Sirius CEO Mel Karmazin, in a speech at the National Press Club in Washington on Monday, said the U.S. is in a “revolutionary age of audio entertainment” and that the companies must compete with a whole range of products that weren’t around when the licenses were first issued.

He said the companies compete with free services, including portable digital music players, cell phones that download music, digital radio and the “800-pound gorilla” that is terrestrial radio.

The National Association of Broadcasters opposes the merger, calling it a “government-sanctioned monopoly.”

Spokesman Dennis Wharton said in a written statement that policymakers “should not be hoodwinked” by the announcement. He said the “a la carte” option would require customers to buy new radios and he said that nothing in the past has prevented either company from offering an a la carte option before.

Karmazin said savings to be realized with a merger would amount to “hundreds of millions of dollars per year” thanks to a drop in expenses. Such a savings is what would make the “a la carte” packages possible.

He noted that Sirius has never turned a profit in its 17-year history and lost $1 billion last year, but insisted if the proposed merger does not go through, nothing will change.

“I believe both companies will be able to compete in a robust market,” he said.

If a merger is approved, the combined company would offer a total of eight different packages.

The lowest-priced “a la carte” package would offer 50 stations from one service for $6.99 per month, plus additional non-premium stations within the service at 25 cents apiece. Premium programming, however, like professional sports and the Howard Stern show, would cost $5 or $6 more.