Satellite radio merger plan questioned

ASHINGTON — The chairman of a Senate antitrust panel expressed skepticism Tuesday regarding claims by two satellite radio companies that their merger would not eliminate competition or lead to higher prices.

During a hearing on the proposed combination of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., Sen. Herb Kohl, D-Wis., questioned assertions by Sirius’s chief executive that the combined company would still face significant competition with land-based radio, iPods and Internet radio.

“We must view these claims with a healthy degree of skepticism,” Kohl said. “Over-the-air radio does not come close to duplicating the impressive array of program offerings of satellite radio.”

Mel Karmazin, chief executive of Sirius, nevertheless stuck to his argument that a combined Sirius-XM would face heavy competition from other sources of music, sports and news.

“There is no question that there is robust competition in this area,” he said. Karmazin testified before the Senate Judiciary subcommittee on antitrust, competition policy and consumer rights, which Kohl chairs.

Sirius offered to pay $4.7 billion in stock for XM when the transaction was announced Feb. 19.

The combined company would be able to pass on some cost savings to consumers, Karmazin said, and would charge a lower rate of $8.95 to $9.95 per month for basic service. Both XM and Sirius currently charge subscribers $12.95 per month for basic service.