FCC Chairman Questioning XM/Sirius Deal

Wednesday, March 7, 2007 at 4:44 AM
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Mel Karmazin
The New York Times is reporting that FCC Chairman Kevin Martin has - in private conversations - questioned Mel Karmazin's statements about price increases, at last week's Congressional hearings.

In question is Karmazin's promise to not raise prices beyond what subscribers currently pay. What was not clear to the FCC Chair is whether Mel meant beyond the $12.95 pricepoint, or the combined cost of $25.90/month.

When the New York Times questioned Mel Karmazin, he stated that his testimony was not misleading and that he meant to say two things: subscribers wanting to keep their existing service would not face a price increase, and listeners who wanted the best of both services would pay less than the combined rate of $25.90.

Mr. Martin was also contacted by the New York Times and said that he was not questioning the motives or candor of Mr. Karmazin but that there was “a need for greater clarity” over what was being proposed for fees and programming. Mr. Martin added that the hearing left those issues unclear. “When they talk about freezing rates and lowering rates, are they talking about it in terms of the current rate of $12.95 for each service, or are they referring to the combined rate of $25.90?”

The two people who had the private conversation with Mr. Martin (and apparently leaked this information to the NY Times) said that Martin seemed skeptical about both the deal, and how it was being sold to Washington.

Karmazin told the New York Times that he thought he had been clear that to get the best of both XM and Sirius, consumers would have to pay more than the monthly rate of $12.95, but less than the combined rate of $25.90. Consumers who just want to stay with their existing lineup would be guaranteed the same price, he said.

“If the merger is approved there will be lower prices and more choice,” Mr. Karmazin said. “If the merger is not approved, there is no discussion on price and there is no discussion about more choices.”

Mel Karmazin is scheduled to appear before a second Congressional panel today.

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Comments


Seems fair...I can't argue with either side. I have my questions about the merger but did'nt think about the price of the combined price of both services and what they would charge us.

ohoh

Good, hopefully he questions it enough to block it.

So the merger does not help the consumer at all - you have the same choice now - get both services for $25.90 or get one for $12.95. If this is truly what the plan is - there is no way this merger should go through.

I don't know that it's necessarily unfair, but I think it might have been deliberately ambiguous in order to make it seem more beneficial to the consumer. I had read the initial statement, and understood it differently as well.

It sounds as if what will be offered is what the consumer can already get, but at a somewhat (and undetermined) discounted rate.

Is that really a sound basis to change an existing law and allow a monopoly (it is a monopoly, no matter what they call it)? I don't think it benefits the consumer in the long run. I don't think monopolies ever do.

I guess we'll have to wait and see what happens.

Now we get to the fine print. For those of you who thought you's get everything for $12.95 (or less), here is your wakeup call.

Miss the 8M: The article says both for LESS than the combined $25.90.


None of this really bothers me. I never expected to get both services, as they are today, for $12.95. I assumed they would either stay seperate, with seperate prices or that the two programming lineups would be combined, with equivalent channels being replaced by their better counterpart. Anything beyond this is just icing on the cake for me.

Here's what no one is questioning. How are you going to keep your current service for $12.95 and have any savings through the merger. Isn't changing channels with "equivalent channels and replacing them with their better counterpart" changing your current service? And who is to say which "counterpart" is better? That's a completely subjective opinion. If you're used to a Sirius channel you're not going to like it going away and the same goes for XM listeners. Can Mel say that for the same price I can keep my current line-up of channels because that's what I bought in the first place? Bullshit. Channel line-ups are going to change and no matter who you are or what service you have you're going to lose some channels that you used to enjoy. Maybe you'll prefer the new channel, maybe you won't. The fact is that you, the consumer, no longer have any say in it.

PFreak has hit the mark with what I am worrying about. I happen to like my XM service just the way it is.

So far what I have heard is that they will keep the services running for each existing radio - that means no savings on satellites. Something has to give and, as it is in every merger, it will be people - in this case talent providing what they consider duplicate programming. Anyone who does not believe this is kidding themselves.

They will not drop the Oprahs and Howard Sterns - they will drop that favorite music station you like that gets it just the way you like it.

It may not happen right away - but it will happen.

And if this merger does go through, there will be a period where you can keep your $12.95 service but once the dual receivers hit the market, the single company is going to want to move over to those, phase out the existing radios then charge the $16.95 or whatever it will be for the new service. While this saves dual subs money, it forces the rest of us to pay more. Will we get more channels? Probably but that doesn't mean it will be the same channels we've come to enjoy and it does mean we'll all be paying more in the long run.

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