Orbitcast Interview with Mel Karmazin

Thursday, August 16, 2007 at 8:08 AM

Tags: 2, XM

Mel Karmazin, the present CEO of Sirius Satellite Radio - and slated to become the CEO of a merged Sirius-XM, if approved by regulators - agreed to an interview with Orbitcast to discuss the pending satellite radio merger.

Knowing that Orbitcast readers include subscribers, investors and industry watchers alike, Karmazin went into great detail about the state of competition, the proposed a la carte pricing, and the overall prospects of the merger.

"More choices, better pricing." This has been the mantra throughout the merger process. What would prevent you from raising prices after the merger is approved?

Here's how we came up with that. When I had the Board meeting to discuss what we had to accomplish to get the merger approved, number one we had to demonstrate that it was not anti-competitive. And we believe clearly that satellite radio competes with all kinds of other audio entertainment devices, especially terrestrial radio. The fact that the NAB has been so aggressive in this - and thank goodness for them - has really proved our point. That we do compete with them.

The other aspect that we'd have to deal with is that it would have to be in the public interest. In transferring the licenses, the FCC uses the standard of "is it in the public interest?" while the Justice Department is much more focused on anti-competitive and the efficiencies of the merger. The FCC looks at the same things, plus public interest.

Our sense is that we would offer the consumer some simply clear benefits: lower prices and more choice. And obviously lower prices and more choice constitutes what we think is in the public's best interest.

On the question about how long we would keep the prices there, and about raising prices. I think it's very simple - right now we compete with free radio, and we charge $12.95. Thanks to the efficiencies of the merger, which we believe they are very substantial - hundreds of millions of dollars a year on the short-term - and that has nothing to do with what might be done long-term with satellites and things like that. We are then able to take some of those efficiencies from the merger and pass it on to the consumer in lower prices.

We only have 3.4% of the radio listening audience, according to Arbitron. It's unlike the cable companies, and the satellite TV companies, which are both very well established. Their interest is in growing ARPU because they're not adding subscribers. We think there's an opportunity for us to add a substantial number of subscribers if our price point came down thanks to the efficiencies. The a la carte packages starts at $6.99, which is a 46% reduction in our current price. So in short my hope is that we can keep the prices there forever. Again, the check and balances for is that we compete with free. Obviously we're more apt to get a subscriber for $6.99 than we are for $12.95.

But doesn't satellite radio offer something that terrestrial doesn't? If satellite radio is the "aggregation of niches" and terrestrial caters to an advertiser driven audience - isn't there the potential for satellite to control a niche-driven audience as a result?

What's city are you in?

New York City.

Ok, so you take all of the radio stations - that means around 125 radio stations in New York City - and some of them are niche radio stations and some of them are broad appeal. You get into your car and put on satellite radio, or you put on your AM station, or you put on your FM station. We're not comparing ourselves to any given station. We have 65 commercial-free music channels, and there are at least 65 music channels on terrestrial radio. And a consumer has a choice - they can pay for radio by listening to the commercials. You listen to LTW, the way you pay for that is by listening to the commercials. Or you can say "I'd rather not pay for it that way, I'd rather pay 43-cents a day" by subscribing to satellite radio and not having to hear the commercials. So I don't know what the government has in their desire to have us firm up something about the lower prices, but because I believe in the lower prices, I'd be willing to hear what they have to say.

Let me make this analogy. Look what happened to Plasma televisions. When the prices came down, more and more people bought them. There's an opportunity for us. We have about 7 million subscribers at Sirius and XM has some 8 million, and between the two companies there's 15 million subscribers. But there's 300 million people in the United States. There's 109 million homes. So we really have not penetrated at this point, and I think the way most people believe that among the ways we can have greater penetration is by offering lower prices. That's just economics right?

The NAB has said that terrestrial radio cannot compete on a nationwide basis. That they compete "one-way" against satellite. What's your thoughts on that definition of competition?

My understanding is Rush Limbaugh is available on a national basis. And Sean Hannity has 550 stations that he's available on a national basis. Those are owned by Clear Channel and Clear Channel still has over a 1,000 radio stations. There are over 12,000 radio stations [nationwide]. There's no limit to the number of radio stations that one company can own on a national basis. Is hard to believe that argument that they're saying. When you aggregate the nation, you're basically dealing with people listening in every single market. So in every single market we're competing with terrestrial radio.

If there argument is the relevancy of the national platform, I think what we're talking about is actually: advertising. And the radio industry has $21 billion dollars worth of advertising revenue. If you total up the total of XM's and Sirius' advertising revenue, you get to a number that is probably under $80 million. Last year I think it might have been $60 million dollars.

Most people think that most radio is "local" but the relevant argument is on a national platform. How much national advertising do those companies have? Let's compare $80 million with $21 billion. (laughs) So what are they worried about?

And if they are worried, that's called "competition." You know, they've gotten their spectrum for free. We bought our spectrum. The fact that they are going to have a better competitor... well, hurray for the consumer. That's why the NAB argument is very transparent, and you can see it. They want us to have higher prices. If, in fact, the merger would result in higher prices, the NAB would love it. Because then we would become more expensive, and therefore we would get less subscribers. And that's what they want.

They've made probably about 15 or 20 arguments about why the deal shouldn't be put through. They've said something about the fact that we've had an issue with FM modulators and repeaters. We've said that's an enforcement issue, and will be dealt with the FCC in the proper place. But if they prevailed in that argument, that means there would never be a transaction in terrestrial radio or television, because every broadcaster has had some issues - whether it be payola at Clear Channel, whether it be children's programming at Univision (they paid a $24 million fine before their transaction was approved). Clear Channel has been found guilty of indecency violations as well as payola. Entercom has as well.

They've made a tremendous amount of arguments without, in my opinion, considering what the implications are for them.

What's your take on the 82 member of Congress who have voiced opposition to the merger?

I hate the idea. It strikes me that those members of Congress should be interested in the benefits of their voters, their constituencies, which would mean "more choice, better prices." You have to appreciate the fact that all these Congressmen and Senators go back home, and deal with their local radio stations when they're in the community. Obviously local radio is very important to these Congressmen particularly. They do interviews there. They have relationships with them. And obviously the NAB is a very powerful lobbying organization.

Relatively speaking it's a small percentage of The Hill, but I hate the fact that that many Congressmen have signed on for it. It just shows to me the influence of the NAB.

You're a seasoned professional when it comes to doing big deals. Would you have done this deal if you weren't sure you could get it through regulators?

(laughs) Of course not. Not only would I not have, but our boards would not have. And XM would not have. Before we did it, we had both anti-trust and FCC lawyers come in and tell us what the issues were. And at the end of the day, we concluded - and though it's obviously never a sure thing, you have to go through a process - but we wouldn't have announced it if in fact we didn't believe we would get it through. And almost proof of it is that XM did exactly the same thing. We're not represented by the same lawyers, and they had their own expert anti-trust lawyers and their expert FCC lawyers go through the same process and they concluded that the deal could go through. So there's Latham & Watkins who's representing XM, and Wiley Rein is representing us [Sirius] at the FCC. Jones Day is representing XM on antitrust, and Simpson Thatcher is representing us on antitrust. And those lawfirms said that - and now you can't speak for politics because politics you can't predict, and I'm not underestimating the politics of it - but we believe that the deal should be put through.

Many current subscribers of both Sirius and XM fear this merger will result in a loss of their favorite channels or favorite talkshow hosts. How can you alleviate the concerns of current subscribers from a programming perspective?

Ok. I think the biggest thing we have going for us is our subscribers. And by the way, we have not really wanted to even disrupt the experience, so we have not even been on the air asking people to write their Congressman. Because we really didn't want to burden anybody in our process. Our customer satisfaction is extraordinarily high at Sirius, and the last thing we're going to do is to do anything stupid. And that is to compromise the experience of listening to satellite radio. The proof is that it's just too easy to cancel.

The argument for us is #1 why would we want to do it. The financial efficiencies of the merger are so substantial that it's not like we're going to have any debt as a result of it. We're not borrowing any money to make this transaction happen. It's a stock for stock exchange. So that the company doesn't have any incentive but to enhance the program offering. There's nobody that would begin to think that after we accomplish the merger, why would we be better off screwing up the programming that we have? As compared to taking the money and investing it into enhancing the program.

I don't even get the argument.

I remember getting the argument in some other deals I did way back when about whether I would be able to keep Howard Stern and Don Imus since we had such large amounts of debt when we were going private. But in this [Sirius and XM] transaction there really is no additional cost we're incurring. All we're incurring is efficiencies from the merger, and therefore we would have more resources to invest in programming.

Ok, final question: what's your favorite channel on Sirius?

I spend a whole bunch of time on CNBC (laughs). It's just what I do when I'm in the car. Most of the time I'm going through listening to all of our channels and giving Scott Greenstein - who is our president of programming - my opinions of it. But probably if you were to have a meter on which one I spend the most amount of time listening to, it probably would be CNBC.

Well you just agreed to do a commercial for them.

Right and I agreed to do a commercial for them because they asked. I did the Neil Cavuto thing, and he thought I got for paid for it, and I saw something about it on some of the message boards that indicated that we got paid. But you know, there was no money that transferred hands. They asked me if I'd do them a favor, and I'm a fan of the channel on Sirius, and I thought it would sound really good hearing me on XM as well (laughs). So I agreed to do it.

Well, I think they did you guys a favor by putting the Sirius logo was all over it.

Well, when you're a new company like ours, and we're a relatively new company, getting your brand out there as much as you can is important. And I think they did a good job.

Comments

Yeah, it's real telling that his favorite radio station on his own service isn't even programmed by his company...

And loved his non-answer about losing favorite channels, too!!

Robert

Posted by: Robert | August 16, 2007 8:41 AM

Very good interview. I particularly liked the following question. Nobody in the press seems to have the aptitude to ask questions like this. I think Mel has done about $80 billion worth of deals in his career. Good job Ryan ----

(laughs) Of course not. Not only would I not have, but our boards would not have. And XM would not have.

Posted by: MUSCLE13 | August 16, 2007 8:41 AM

Good job Ryan.

Mel is the man.

Posted by: Daily Reader | August 16, 2007 8:42 AM

Further proof that Orbitcast is THE online publication for satellite radio. You're an industry trade pub like All Access and FMQB now. But the scary thing is you're just one guy Ryan.

Great job and a big thumbs up for Karmazin for agreeing to the interview.

Posted by: xoxo | August 16, 2007 8:59 AM

Good questions. I would have liked to have read some more. It was too short. Maybe you were playing around with the new products for too long.

Posted by: BigT | August 16, 2007 9:14 AM

damn, Ryan...good interview, man!

i couldn't agree more with you, xoxo.

Posted by: dumpus | August 16, 2007 9:24 AM

good for you, ryan.

Posted by: Tom | August 16, 2007 9:43 AM

Shoulda asked if the rumors are true that 0.0 are gonna be up out when this thing is done and Bubba gets 202.

Posted by: Anonymous Coward | August 16, 2007 10:03 AM

Just an FYI, this interview was actually done before the Sirius product preview yesterday.

Posted by: Ryan Saghir | August 16, 2007 10:14 AM

Ryan - that was a fine interview in every respect. I'm sure there is no limit to the questions you want to ask in such an interview, but you only have so much time. For me, they would be:

1. How is the competition from terrestrial radio today really, meaningfully different from the way it was when you agreed to no merger as a precondition to the grant of your license by FCC?

2. Which monopolies, other than public utilities, can you point to as examples where the public interest was served by a monopoly -- and if monopolies DO serve the public interest, why has the FCC been so adamant in avoiding monopoly creation in the past? (Follow up, if the response is "this isn't creating a monopoly because there is so much competition": Does any of that competition deliver real time broadcast of commercial free content to vehicles driving down the road?)

3. Why are you adding two more satellites to your constellation in the next 2-3 years?

Posted by: StackPointer | August 16, 2007 10:26 AM

That first question is simple to answer for anyone. Terrestrial radio didn't have thousands of new owned and operated HD radio stations 10 years ago.

Posted by: MUSCLE13 | August 16, 2007 10:33 AM

I wish you would of asked the name of the new company, No one has answered that question yet...

Posted by: Brian | August 16, 2007 10:36 AM

Does any of that competition deliver real time broadcast of commercial free content to vehicles driving down the road?

That question is pretty easy too. HD Radio and cellphone radio. Subscription Internet radio in the car is quite obviously close too.

That 3rd question is pretty simple too - Improved reception is my thought.

Those questions are pretty obvious. I wouldn't have asked them.

Posted by: MUSCLE13 | August 16, 2007 10:41 AM

>> Terrestrial radio didn't have thousands of new owned and operated HD radio stations 10 years ago.

Well, the answer may be easy, but it in no way addresses the question -- how is the competition different? The existence of HD Radio today is absolutely immaterial to the argument. Perhaps, some day, it won't be -- but for now, it simply has no bearing.

More importantly, HD Radio is no different from terrestrial. It is just more of the same. HD Radio has the same old problems terrestrial does -- 1/3 advertisements, limited range, limited content, the lack of a nationwide audience to fund the acquisition of premium content, etc.

The only attribute HD Radio shares with SDARS is digital compression. That's it; everything else is different.

The "simple answer" doesn't address the question in any way.

Posted by: StackPointer | August 16, 2007 11:09 AM

You are telling me that thousands of new radio stations that didn't exist 10 years ago doesn't mean new competition. I can't stop laughing. Thats the dumbest statement I ever read.

Posted by: MUSCLE | August 16, 2007 11:13 AM

It isn't "thousands". It is 1,360, covering a tiny fraction of 1% of the area covered by satellite radio and lacking any material listenership. Even on the fringes HD Radio is not a competitor to satellite radio. So, laugh all you want.

As to your remark "Subscription Internet radio in the car is quite obviously close too", I can only say it reflects total ignorance of the facts. Not only is there no infrastructure to support "subscription internet radio in the car", there is no business model for such a service, the service would lack the fundamental requirement of an integrated delivery system (you would have to first purchase the bandwidth and then go buy the service), and it would be many, many years before ubiquitous coverage of the country might (stress "might") be available. And there are tens of other problems to be worked out. You want to call this "competition"?

The pro-Mel forces will twist and bend logic in any direction to try to support his argument. But rationally, you simply cannot argue that these present meaningful competition for satellite radio.

Posted by: StackPointer | August 16, 2007 11:32 AM

Ryan, I wonder if you had the chance to see the 'Interoperable reciever on Mel's desk'. And if it looked anything like the XpressRC and the new stiletto.

------------------------------------------------------------------------

"Shoulda asked if the rumors are true that 0.0 are gonna be up out when this thing is done and Bubba gets 202."

Are you kidding me? That is a lot like trading Peyton Manning for Vinny Testaverde

Posted by: espnjason | August 16, 2007 11:45 AM

Great interview, Ryan...Hey, maybe we could get XM's viewpoint from Gary Parsons or something next. :)

Posted by: Wes Derby | August 16, 2007 11:50 AM

Holy Toledo Ryan - Is StackPointer a NAB representative? This guy sounds just like all the NAB quotes you post. Its hilarious!

The arguments ring - HD isn't competition! Cellphone and Ipods are not competition! Internet in the car is years away even when Wi-Max is going full steam ahead next year with Sprint! Monopoly Monopoly Monopoly!

This guy sounds just like the NAB to me.

Posted by: MUSCLE13 | August 16, 2007 11:54 AM

"It isn't "thousands". It is 1,360, covering a tiny fraction of 1% of the area covered by satellite radio and lacking any material listenership. Even on the fringes HD Radio is not a competitor to satellite radio. So, laugh all you want."

Aren't there HD radio stations in just about every major market in this country?

Take a look

http://www.hdradio.com/find_an_hd_digital_radio_station.php?PHPSESSID=4cbf1a4b5a6ed309d5ec897481bca145

Posted by: Anonymous Coward | August 16, 2007 11:59 AM

ya know its funny......the boys have been saying that bubba the boob wont survive the merger.....i see some folks think hes gonna get his own channel. that would be very bad for sirius. cuz O&A are more entertaining and relevant then bubba ever was......meooooooooow!

Posted by: trundle | August 16, 2007 12:49 PM

•Stack
'The pro-Mel forces will twist and bend logic in any direction to try to support his argument. But rationally, you simply cannot argue that these present meaningful competition for satellite radio.'
-And any actual logic pointed to you is all twisted back to being anit-merger.

'HD Radio is no different from terrestrial. It is just more of the same. HD Radio has the same old problems terrestrial does -- 1/3 advertisements, limited range, limited content, the lack of a nationwide audience to fund the acquisition of premium content, etc'
-Not true as I've pointed out to you in the past. It's not limited content in even 30 stations will turn into 60-90 HD stations. And once profitable stations are making money, the other HD stations will be able to go commercial free if needed as incentive to not pay for commercial free satellite with it's monthly fees, and DJs will be able to do product mentions. It's been done before on free radio, and with HD stations, becomes very likely more commercial free stations can pop up. Advertising on the main station/2nd HD station will bring in enough for commercial free 3rd HD stations. Stations will be able to be so diverse because not every stations doing alternative & easy listening. It'll be a station doing alternative, classic rock; another doing 80's pop, new pop and comedy. Country & R&B could get a wide range of listeners in different demographics. There will be as many music station alternatives if not more in major markets then satellite offers. Limited range is based on syndication of shows. nd if anything, free radios vast amount of more DJs all over the country. Just because they're not on satellite, doesn't make a DJ not a DJ and music not music. HD radio is not the same as regular radio because it has more options now that the NAB wants people to ignore because their affraid of satellite.

What's funny is everybody who makes the obvious points to you, you just say something entirely crazy to counter back with.

Posted by: JckMyrhffr | August 16, 2007 12:56 PM

>>> HD radio is not the same as regular radio because it has more options now that the NAB wants people to ignore because their affraid of satellite.

Honestly, the argument is totally hollow -- until HD Radio shows that it can develop significant listenership, it does not constitute competition.

There are lots of possibilities -- a number of HD stations nationwide could band together and do something that would be akin to the service satellite radio delivers. Fine. If they do it, then it can be considered. Today, it simply is not a factor, and there is no way of knowing whether it will be.

It is utterly stupid to throw away the competition in satellite radio on what may happen 10 years down the road. You can't just "un-merge" once the mistake is apparent.

As to your personal attacks, I prefer to make my arguments on the facts and the supporting logic.

Posted by: StackPointer | August 16, 2007 2:10 PM

Hoo Hoo, Mel. The Sirius fans swallowed everything you said hook, line, and sinker. That Stackpointer is a real troublemaker, though. He must be a Greg and Tony fan.

Posted by: Hoo Hoo | August 16, 2007 2:43 PM

'Honestly, the argument is totally hollow -- until HD Radio shows that it can develop significant listenership, it does not constitute competition.'

And by your logic since satellite radio only has 15M and terrestrial radio has 200M+ listeners...satellite radio hasn't been able to dent the terrestrial controlled market to matter either. Therefore, wouldn't it make sense to try to compete with terrestrial radio by merging? Since the NAB has admitted that satellite and terrestrial radio are competitors. And satellite isn't throwing away competeting with each other, as they keep making satellites, new products and advertising as why each is better if the merger falls through.

'It is utterly stupid to throw away the competition in satellite radio on what may happen 10 years down the road. You can't just "un-merge" once the mistake is apparent.'

Yeah, they can't split. But, you don't know what's coming just as much they don't know. They're planning for a future. And it's not a personal attack. I post counter opinions to a lot of people who post things I don't see as being true. And based on this board alone, I'm not the only one who thinks you speek too much about stuff you don't always know about. Accuse me of the same thing, if you want. It's my opinions.

Posted by: JckMyrhffr | August 16, 2007 5:16 PM

GREAT interview Ryan. I'm sure you must have been given a small window to ask questions, so it's too bad we couldn't have gotten more.
-------------------------

"
Yeah, it's real telling that his favorite radio station on his own service isn't even programmed by his company...

Robert
"

Funny, I was going to comment on the same things. I noticed he answered with rhetorical questions such as "and the last thing we're going to do is do something stupid", and "why would we want to do that".

C'mon Mel, stop dancing around the subject, you know you'll be consolidating channels.

Posted by: SatelliteRadioFan | August 16, 2007 5:19 PM

>> And based on this board alone, I'm not the only one who thinks you speek too much about stuff you don't always know about.

That I don't "know about"? If you have an example of me speaking about stuff I don't "know about", please let's see it. My views are certainly different from most here, but I would argue (correctly) that most here are utterly clueless.

Again, leaving the veiled personal attacks behind, I will say that these are points smart people can disagree about. But if one looks at the issues in a rational manner, it is a fact that HD and terrestrial and Ipods all "compete" with satellite radio, but they do not "compete" in the head-to-head manner that would be required to support an argument that a merger to monopoly is not anticompetitive (within the meaning of the antitrust law).

I have, in previous posts on another thread, cited the FTC v. Staples result -- and I think the fact that FTC is challenging the Whole Foods merger speaks volumes about the issue. The simple fact is that the market, for antitrust purposes, is not given a the broad definition of "competition" that would be required for this merger to be allowed. XM and Sirius are two competitors in a duopoly (I might add, Mel has, himself, made this statement, and Parsons has frequently cited the "fierce competition" as a key reason for XM's superiority; I, for one, hate to see that competition lost to another Sirius Hail Mary).

Mel is doing everything in his power to change the way the law is interpreted, to broaden the scope of "competition" as it has been historically defined. Hopefully, he will fail -- as it obviously could destroy the quality of XM if XM channels begin being clobbered to make room for Sirius channels. But he may succeed -- I don't think you you can count him out. Mel is a slick salesman as can be seen by how easily he got 900,000 Sirius shareholders onboard with the idea.

While a merger clearly would help Sirius, both financially and from a product quality perspective, I believe it would do so at XM's expense, and that is a result I don't want to see -- either an XM shareholder or as a customer.

Posted by: StackPointer | August 16, 2007 5:56 PM

Hoo Hoo, Mel. This Stackpointer guy has got to go. He just identified the actual size of my audience. Someone's going to put two-and-two-together and realize that you were a God-damned, white-haired, fool to pay $500,000,000 - $1,000,000,000 for me. Hoo Hoo.

Posted by: Hoo Hoo | August 16, 2007 6:50 PM

•Stack
'it is a fact that HD and terrestrial and Ipods all "compete" with satellite radio, but they do not "compete" in the head-to-head manner that would be required to support an argument that a merger to monopoly is not anticompetitive (within the meaning of the antitrust law).'
-They either compete, or they don't. Pick one.

I use the examples of MUSCLE13 and Annonymous Coward above as to the people who think you talk a lot about things you don't know about. And you're right, personal attacks aside...

I am a Sirius subscriber. If XM didn't have anything to gain from this, they didn't have to agree to merger talks in the firlst place. Mel is being the face of the merger, because if it were Parsons from the start...it'd be Parsons doing the interview on this page. I always wonder what Sirius channels could be consolidated, but I also understand that radio stations have always changed. Goes back to the terrestrial days. I used to listen to the classic rock channel more than others. They changed format, I got over it and there's still no real classic rock channel to comeback in this city...One thing I love about Classic Vinyl and Classic Rewind on Sirius. I love the Sirius lineup the way it is. But, I see that having two 50s, 60s, 70s, 80s channels may be a bit of cost overkill to run and can be consolidated, could free up extra money between the merged company. And XM and Sirius would be listening to the same channels in some cases. But Mel says in this interview; "why would we be better off screwing up the programming that we have? As compared to taking the money and investing it into enhancing the program.'. Sounds like a lot's going untouched in my take on that statement.

If Parsons (XM) objects at any point to what Mel says, if he feels they're on the losing end of profit, if it's getting shareholders something against their interests, or the company would be better off the way it is now...They can back out of the merger based on being mislead by Mel (Sirius). They have their own lawyers who are representing them to get out of this. And we all go back to the way it is now. But, I've yet to see Parsons object to this merger no matter how much XM was 'beating' Sirius.

Posted by: JckMyrhffr | August 16, 2007 6:58 PM

>>> They either compete, or they don't. Pick one.

Fortunately, that isn't the way it works. The law the DOJ is working under is complex and subject to interpretation; that is what courts are for. However, this seems pretty clear cut, and I haven't seen you or anyone else citing any legal authority for the narrow definition Mel is pushing for.

>>> I use the examples of MUSCLE13 and Annonymous Coward above as to the people who think you talk a lot about things you don't know about. And you're right, personal attacks aside...

With all due respect to MUSCLE13, his posts in this thread lacked ANY substance. In one, he claims that "thousands" of HD Radio stations materially alter the competitive landscape, when the number is not "thousands" but more importantly, the number of listeners is totally inconsequential. These are inarguable facts. Then he goes on to make some ridiculous claim about in-car Internet, which anyone remotely familiar with the technology knows isn't close and certainly isn't close to widespread availability. When I see someone roll out the in-car Internet argument, I know they have consumed massive quantities of Uninformed Message Board Koolaid. That's before you even BEGIN to read his posts elsewhere.

As to "Anonymous Coward" (the name says it all), yes, most major markets have at least SOME HD Radio stations. That is not to suggest that significant numbers are listening (we know they aren't, because almost NO receivers have been sold). But as I've tried to explain to you, it is beside the point. HD Radio has, in no way, altered the competitive environment as between SDARS and terrestrial because HD Radio has the same attributes as terrestrial and none in common with SDARS. In effect, HD Radio amounts to a 10% increase in the number of terrestrial stations, which obviously doesn't materially alter the competitive environment for SDARS.

>>> I am a Sirius subscriber.

I know. As a general rule, merger supporters ARE.

>>> If XM didn't have anything to gain from this, they didn't have to agree to merger talks in the firlst place. Mel is being the face of the merger, because if it were Parsons from the start...it'd be Parsons doing the interview on this page.

Most of the time, Boards of Directors act in good faith on what they believe their shareholders want. 90% of XM's shares were held by institutions, and in my opinion those shareholders were a target of a slick Mel Karmazin sales job (this would have been another great question for Ryan to have asked -- "Did you (or your representatives), prior or during to the merger discussions (which began early in '06), have ANY DISCUSSIONS with the institutions who controlled XM's shares"). XM's BOD more than likely acted on the demands, however misplaced, of its shareholders.

>>>> I always wonder what Sirius channels could be consolidated ... One thing I love about Classic Vinyl and Classic Rewind on Sirius. I love the Sirius lineup the way it is. But, I see that having two 50s, 60s, 70s, 80s channels may be a bit of cost overkill to run and can be consolidated, could free up extra money between the merged company.

There is little doubt some of these channels will go. As will three of the six classical channels. As will one of the blues channels, some of the country, etc. "Diversity", you know? Now these channels cost little to produce, but the merger makes absolutely no sense if they aren't going to cut content & production costs, and this is the easiest thing to do.

Do you like XM's 60s channel? It is nothing like SIRI's. Some people like one, some like the other. I don't like XM's 60s format. But a lot of people do. Which one makes the cut? Diversity, my ass. I would be pissed if the combined entity did away with XM's Deeptracks in favor of the Vault, or Xm's far superior classical music channels. But, something has to go, or there is zero savings operationally (don't even get me started on the nonexistent synergies issue).

>>>>>>>>And XM and Sirius would be listening to the same channels in some cases. But Mel says in this interview; "why would we be better off screwing up the programming that we have? As compared to taking the money and investing it into enhancing the program.'. Sounds like a lot's going untouched in my take on that statement.

Not according to Mel's prior statements, and not according to David Frear's remarks when he explained where the so-called "savings" are coming from.

>>> If Parsons (XM) objects at any point to what Mel says, if he feels they're on the losing end of profit, if it's getting shareholders something against their interests, or the company would be better off the way it is now...They can back out of the merger based on being mislead by Mel (Sirius).

Nonsense. If they back out it costs $175 Million. Period.

>>> They have their own lawyers who are representing them to get out of this. And we all go back to the way it is now. But, I've yet to see Parsons object to this merger no matter how much XM was 'beating' Sirius.

I believe Parsons has been under great pressure from his stockholders to do this deal -- because stockholders have been sold a line of crap by Mel. Can't prove it, but I believe it. Mel is a great salesman. But the reality is that the merger is being pursued for one reason: Mel knows that Sirius is in very deep financial trouble, and while the merger won't solve the problem (the merger just destroys both companies, financially), it will get him down the road a few years -- just like the NFL deal did -- just like the Stern Deal did, and now the third Hail Mary.

Posted by: StackPointer | August 16, 2007 9:02 PM

''(My statement)....>>> If Parsons (XM) objects at any point to what Mel says, if he feels they're on the losing end of profit, if it's getting shareholders something against their interests, or the company would be better off the way it is now...They can back out of the merger based on being mislead by Mel (Sirius).
-(Yours) If they back out it costs $175 Million. Period.''
•Which...if you think about it....they can still back out and save themselves if they fell they need it. I mentioned nothing about cost of it. Just if they felt it was better to make money in the long run. They can back out. The deal has not been completed. Period.

">>> I am a Sirius subscriber.
I know. As a general rule, merger supporters ARE."
•Speculation. You don't know what XM listeners are all thinking. And if XM listeners submitted opinions on the merger to the FCC, I'd say the numbers then wouldn't have been as lopsided as they were. And i'm sure the support I've seen from some on here would be against instead. It's more complicated than who's listening to what, and I really don't understand how you come up with it.

"(on competition)...However, this seems pretty clear cut, and I haven't seen you or anyone else citing any legal authority for the narrow definition Mel is pushing for."
•I don't like your Whole Foods merger mentions. I just don't see it really. The NAB has clearly stated competition in iPods, internet radio, satellite radio, cds, etc. If I play DOJ, I don't see monopoly just because it's a satellite license. Granted there's two and would be only one later. I see just another radio license that's even more forced to keep it's words after the merger, competes with terrestrial radio, iPods, internet radio, CDs, etc. and has to keep subscribers coming to even stay afloat, merger or no merger. But, maybe that's why I'm not part of the DOJ...and neither are you.

"There is little doubt some of these channels will go. As will three of the six classical channels. As will one of the blues channels, some of the country, etc. "Diversity", you know? Now these channels cost little to produce, but the merger makes absolutely no sense if they aren't going to cut content & production costs, and this is the easiest thing to do"
•OK. A dual reciever comes out for, let's say, $75. Instead of making a Sirius only and XM only radio, they're consildating chip sets and everything into one new reciever. Costs go down on materials, technology advances will make production costs cheaper (see VCR and DVD players, if you try to argue that). That's one production cost cut. Advertising against each other...gone, another cost cut. More radios sold to people who didn't have interest in Howard or O&A and sports and only want commercial free music, more subscription income. Existing members getting another radio and getting sports package because at $10, it's still cheaper then another $12.95/month...again more subscription income. There's more ways they're trying to save money then channel consolidation. I don't know about sciences of signals, but I'm assuming that since XM and Sirius signals exist side by side all the time, they could piggyback satellites with the abilites to send out both signals and save money there at some point, as technology advances. I think there's going to be a lot of ways to save money and increase it coming in after kinks are worked out. They aren't all obvious, but that's why they have accountants deciding the merger is more cost efficient and we're not sitting with the books doing the math. If there's not profit to be made at some point, they'd have seen it before they've come this far.

"on MUSCLE13 and Anonymous Coward"
•I've not seen what MUSCLE13 says much, but I did say he disagrees with what you say, which was my original point. And, Anonymous Coward I've seen post some very good points on here, and to you before, and do think they're pretty reasonable opinions.

I'm sure I missed whatever else is in there. I'm kinda done trading point, counterpoint on this. It's fairly obvious I have my opinions, you have yours. I'm sure we'll agree and/or disagree later, on something as uneventful as this interview really is. All I know is you've swayed me none. I'm still for this merger.

Posted by: JckMyrhffr | August 16, 2007 11:30 PM

WHEW!!! What a bag of gas!! Not Mel, MEEE... Where's the toilet paper??? mom come wipe me I'm done...

Posted by: harry hardon | August 17, 2007 4:48 PM

Sirius and XM signals are totally different! Putting them into one box is like combining a telescope with a point and shoot camera - neither one works for the other purpose. It's not going to be cheap to develop into one product, I certainly won't be an early adopter of it. Think of the people who bought the iPhone the first week as compared to the people who bought one yesterday. Ouch! Even with that credit Jobs offered to some, it still ouches!

Satellite Radio doesn't have serious coast to coast competition yet. Once Wi-Fi radio is developed (if the former television bandwidth is ever released!) Then there will be serious competition. This isn't a competition move, it's a preemptive move by Sirius and XM - in response to a threat who hasn't been born.

If there are so many great things and so many programming options that would be available post merger then where are those now - stuck in Mel's closet? Why can't they offer a la carte options on their own? Why are millions going to be spent to put more satellites up when they haven't turned a profit yet? Are they going to uproot the illegally placed repeater towers when that happens? Lastly - Thanks Mel for saying "more choice, better prices" it might make a good slogan for the C3SR.

Posted by: NIMBY | September 12, 2007 12:31 AM

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