Karmazin testifying at House subcommittee today at 2:30pm ET
Mel Karmazin is back in Washington again today to testify about the proposed Sirius-XM merger. The House Subcommittee on Telecommunications and the Internet will be hearing testimony from Karmazin and others today at 2:30pm. The “The Digital Future of the United States: Part II– The Future of Radio” hearing also includes testimony from Peter Smyth of Greater Media and Robert Kimball of RealNetworks.
You can watch a live video webcast of this hearing (Windows Media Player is required).
Watch this post for highlights from the hearing as it happens.
The topics that this committee will address may seem broad or boring, but the outcome of this and other House committee hearings will play a key role in the future of the merger between Sirius and XM. Maybe by the time this is all over, the committee members will be able to correctly pronounce Sirius and Karmazin.
Highlights
3:30pm: Opening statements by committee members are still being made. It seems there will be quite a few topics addressed by this committee. Some of the topics addressed include: increasing the cap on the number of stations owned by a licensee in large markets, broadcaster licensees should better reflect the population by including more women and minorities, the sampling of music to create mash-ups should not be held to the same copyright standards as a song-writer that duplicates another artist’s bass line, local radio provides to the markets they serve local content which satellite does not, technology is out pacing pacing laws that are currently in place and has changed they way consumers gain access to information, will the merger of Sirius and XM result in increased costs, less innovation, and other drawbacks found if there is only one player in the satellite radio market?
3:35pm: We finally finish with the opening statements by the committee members and move to the guest witnesses.
3:45pm: Peter Smyth of Greater Media, Inc and representing the NAB spoke in opposition to the merger claiming that terrestrial radio does not compete in the national market of satellite radio and there would be a monopoly in that market after the merger. Smyth cited FCC violations of the repeaters for XM and SIRIUS and the lack of a device that is able to receive a signal from both services.
3:55pm: Robert Kimball representing RealNetworks and other internet broadcasters spoke in favor of a delay to the merger between Sirius and XM all of the players in the digital audio market can be placed on a level playing field.
4:00pm: Mel Karmazin was allowed to make an opening statment. He made a number of statements about the merger that we’ve heard before and said that he hoped to be asked a lot of questions.
4:05pm: Gene Kimmelman spoke on behalf of the Consumers Union. He stated there are distinct differences between mobile digital audio devices and terrestrial radio.
House Panel Told To Reject Sirius’ Competition Argument
By Corey Boles
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)–The satellite radio market is easily distinguishable from other forms of audio media and its participants are therefore distinct, a leading consumer advocate told a panel of House lawmakers Wednesday.
Testifying before the House Commerce Committee’s telecommunications subcommittee into the future radio, Gene Kimmelman, a vice president with the Consumers Union, said that the argument put forth by the two satellite radio companies didn’t hold water.
“The product and geographic market characteristics of satellite radio are easily identifiable and quite distinct from other mobile and stationary audio products,” said Kimmelman in his opening remarks.
As part of their proposed merger, Sirius Satellite Radio Inc. (SIRI) and XM Satellite Radio Holdings Inc. (XMSR), the companies have said they are not competing just against each other but against traditional, HD and Internet-based radio stations as well as technologies such as Apple Inc.’s (AAPL) Ipod.
Executives at the company need to convince regulators at the Department of Justice’s antitrust unit and the Federal Communications Commission that theirs is more than a market of two players.
Also testifying at the hearing, Robert Kimball, senior vice president at Internet media software developer RealNetworks Inc. (RNWK), said the committee should reject the argument that satellite radio competes with online radio broadcasters.
He said that laws such as the Copyright Act hamper the ability of Internet radio to compete effectively.
“I suggest to you that any XM-Sirius merger that relies upon Internet radio as the justifying competition should be rejected until Congress corrects the Copyright Act’s bias against the internet,” said Kimball.
In his opening statement to the hearing, Sirius Chief Executive Mel Karmazin repeated his mantra that the two companies compete against the range of audio media.
He also said the company would be willing to enter into binding guarantees over price levels post-merger.
“We are prepared at the appropriate time to discuss each of these issues with regulators and to guarantee these benefits as a condition of our merger approval,” said Karmazin. “From our standpoint, these guarantees are not only good for consumers, they are also essential to the long term success of the combined company.”
Rep. Edward Markey, D-Mass., the chairman of the subcommittee, said the merger affected a wide range of issues such as consumer prices and equipment, radio content and the ability of content providers to compete.
Republican Texas lawmaker and ranking member of the overall House Commerce Committee, Joe Barton, acknowledged in his opening comments that it was difficult to define the market in which Sirius and XM operate.
Sirius, XM To Use Separate Networks Until 2016-CEO
By Corey Boles
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)–Sirius Satellite Radio (SIRI) Chief Executive Mel Karmazin said Wednesday that his company and XM Satellite Radio Holdings (XMSR) would continue to operate on separate networks for at least 10 years after a successful merger.
Testifying before a House telecommunications subcommittee hearing into the proposed merger between the two companies, Karmazin said that the earliest the two companies could merge their networks would be in 10 to 12 years’ time.
He said that Sirius was planning to soon launch three new satellites into orbit, which would be operable until between 2016 to 2018.
Karmazin was responding to questioning from Edward Markey, D-Mass., the subcommittee chairman, about whether or not the merger between the two companies couldn’t result in spectrum being freed up for other purposes.
He said that while the two companies would make programming from each others’ networks available to subscribers, they had pledged to ensure that no existing customers’ radios were rendered obsolete by the merger.
Sirius had previously announced the launch of the three satellites. So far it has said the first will be in the air in the second half of 2008.
Earlier in the hearing, Republican lawmaker Lee Turner, of Nebraska, said that he was skeptical of the benefits to consumers of the merger going forward.
Rep. Rick Boucher, D-Va., repeated his statement of last week that he supported the merger as long as there were sufficient attachments to ensure consumer protection.
Separately, the Senate Judiciary Committee’s antitrust subcommittee announced earlier Wednesday that it would hold its own hearing into the proposed merger, the third congressional panel to do so since the deal was announced three weeks’ ago.
Merged Satellite Radio Co Would Pay Artists For Music
By Corey Boles
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)–A merged satellite radio company would continue to pay artists for the right to broadcast their music, Sirius Satellite Radio (SIRI) Chief Executive Mel Karmazin said Wednesday.
Karmazin told lawmakers on the House Telecommunications subcommittee that he was in favor of remunerating artists to allow satellite radio subscribers to record music from their radio.
“We’re implementing my viewpoint at Sirius. We have made an accommodation with the various music labels,” said Karmazin. “After the merger, I will be the CEO, and all I can say is you know my views on the subject.”
Sirius has reached an agreement with the music industry to pay them while rival XM Satellite Radio Holdings (XMSR), which plans to merge with Sirius, has resisted doing so and is currently locked in a court battle with the music industry.
Karmazin said he couldn’t comment on XM’s legal case, nor did he know whether the matter would be resolved by the time the merger, if approved, would be completed.
I wonder just how many of these different committees and subcommittee's Karmazin is going to have to go through to get a merger if he wants one. It seems like there are going to be lots of little groups we've never even heard of, challenging him over this. by MCWHAMMER
Mel's playing nice for all the congresscritters for 2 reasons. First, it gives him a chance to spin the merger in a public forum. Secondly, even though nobody at FCC or DoJ reports to congress, they know where the funding comes from! Mel knows that if Senator X or Congressman Y innocently calls an FCC commissioner to ask about the merger, they'll take that call. by RoadRunner
Mel's playing nice for all the congresscritters for 2 reasons. First, it gives him a chance to spin the merger in a public forum. Secondly, even though nobody at FCC or DoJ reports to congress, they know where the funding comes from! Mel knows that if Senator X or Congressman Y innocently calls an FCC commissioner to ask about the merger, they'll take that call.
Hey NAB if terrestrial radio was added to these devices, sales would go down, people that buy this units are fed up with you and your commercials, we pay our money to have the choice of not listenning to you, your commercials and your views. Its called a democracy remember freedom of choice remember.
Why can't they understand that. by gb1
- FCC says Sirius and XM can merge
- FCC says the condition of them merging is that one of the two of them give their spectrum back to the FCC for use in the SDARS allocation
- FCC auctions that spectrum to a new SDARS licencee
Sirius and XM would go crazy with this. They'll yell that they can't compete against another SDARS service/licensee. Surely they're saying now that each other is not the competition. How hypocritical would that be?
Fact is, Sirius and XM are trying to monopolize the SDARS spectrum. Above is a good test to see just how real they are about them saying that they are not competing against each other, rather they're competing against other digital devices.
Now before someone comes back and says that without the other 1/2 of the SDARS spectrum, they won't be able to make it, here's some additional things about the spin:
- Sirius says they can broadcast video
- The spectrus is for a satellite r-a-d-i-o service (TV or Video is not part of SDARS, and the FCC considers radio and television as separate businesses and spectrum)
- Sirius, if we take 1/2 the SDARS spectrum and you and XM can merge, use that other scheme, (hierarchal modulation -sp?) the one that you want to use for video, for radio channels instead. by HomieG
Now before someone comes back and says that without the other 1/2 of the SDARS spectrum, they won't be able to make it, here's some additional things about the spin:
One or the other service could replace all those receivers if they had to, to make sure the combined company could service both subscriver bases. But alas, they'd argue they can't afford to.
Also, they both were told to develop a dual-service radio. If they did, why did they not market it? Let's see, last week one of them said that they were concerned they would be selling a radio that would allow a subscriber to choose one or the other service, and they didn't like the idea of selling a radio that would give the subscriber the opportunity to subscribe to the competing service. There's that word again, compete.
Mel is full of it. He's speaking out of both sides of his mouth. They're looking for the government to sanction what is essentially a bail out.
Don't take it personally. We look at it from differing viewpoints. by HomieG
One or the other service could replace all those receivers if they had to, to make sure the combined company could service both subscriver bases. But alas, they'd argue they can't afford to.
Also, they both were told to develop a dual-service radio. If they did, why did they not market it? Let's see, last week one of them said that they were concerned they would be selling a radio that would allow a subscriber to choose one or the other service, and they didn't like the idea of selling a radio that would give the subscriber the opportunity to subscribe to the competing service. There's that word again, compete.
Mel is full of it. He's speaking out of both sides of his mouth. They're looking for the government to sanction what is essentially a bail out.
Don't take it personally. We look at it from differing viewpoints.
The FCC told them that they had to develop a radio that could receive both signals, and they did. What Mel said last week was that the radio would cost to much to market and that they couldn't find people willing to help.
I don't take any thing you say personal, but it is blatantly obvious that you are against the merger and regardless of what the companies say you will call them liars and that your mind is closed to any rational debate about the issue.
your mind is made up and there is no changing your opinion. I'm going to continue to have an open mind about the merger. When we have all the facts and the plan is laid out in detail I will make my final judgment. Something you have already done, without having all the information. by Fergz99
Mel, last week, regarding a dual-service radio:
"We have one. It's in my office. … At this point, there is no market for it because nobody is subsidizing the cost of the (dual) radio. Today what Sirius does is that we subsidize (our) receiver. And the reason we subsidize it is because we're gonna get a subscription. So, we think with the merger this really represents an opportunity for us to be able to financially subsidize radios that provide for interoperability."
Translation - We won't subsidize a radio that has the ability to receive the competition. Oh, there's that word again. Competition. Hmmm, and then he says they're not competing against each other? Yep, speaking out of both sides of his mouth. by HomieG
Mel, last week, regarding a dual-service radio:
"We have one. It's in my office. … At this point, there is no market for it because nobody is subsidizing the cost of the (dual) radio. Today what Sirius does is that we subsidize (our) receiver. And the reason we subsidize it is because we're gonna get a subscription. So, we think with the merger this really represents an opportunity for us to be able to financially subsidize radios that provide for interoperability."
Translation - We won't subsidize a radio that has the ability to receive the competition. Oh, there's that word again. Competition. Hmmm, and then he says they're not competing against each other? Yep, speaking out of both sides of his mouth.
And Mel has never said they don't compete against XM, he says they compete with more then just XM.
Again, no matter what they say or what information comes out your mind is closed to the idea of a merger and it isn't worth debating the points. by Fergz99
I cannot wait for the DOJ and FCC hearings. Bound to be great entertainment.
From most recent Sirius 10-K filing with the SEC:
- XM Radio. Our direct competitor in satellite radio service is XM Radio, the only other FCC licensee for satellite radio service in the United States. XM Radio has announced that it had 5,932,957 subscribers as of December 31, 2005.
- We directly compete for audiences and advertising revenues with XM Radio and traditional AM/FM radio stations, some of which maintain longstanding relationships with advertisers and possess greater resources than we do.
- We compete vigorously with XM Radio [/b]for subscribers and in all other aspects of our business, including the pricing of our service and our radios, retail and automotive distribution arrangements, programming acquisitions and technology. Competition with XM Radio may increase our operating expenses as we seek arrangements with third parties, such as programming providers, and may cause us to reach cash flow breakeven with more subscribers or later than we estimate.
From most recent Sirius 10-Q filing with the SEC:
- In April 2006, we learned that two manufacturers of SIRIUS radios and our principal competitor had received inquiries from the Federal Communications Commission as to whether the FM transmitters in their products complied with the FCC’s emissions and frequency rules.
- We believe these non-GAAP financial measures provide meaningful supplemental information regarding our operating performance and are used by us for budgetary and planning purposes; when publicly providing our business outlook; to compare our performance from period to period; and to compare our performance to that of our primary competitor.
- We use adjusted loss from operations for budgetary and planning purposes; to assess the relative profitability and on-going performance of our consolidated operations; to compare our performance from period to period; and to compare our performance to that of our primary competitor. by HomieG
Like you I oppose the merger (or at least I'm leaning against), but that doesn't make every word Mel and Gary say a lie! by RoadRunner
And Mel has never said they don't compete against XM, he says they compete with more then just XM.
Again, no matter what they say or what information comes out your mind is closed to the idea of a merger and it isn't worth debating the points.
For example he says sirius customers will receive the same programming that we get now at the same price. What does this mean? Will we receive more choice because they will be able to give us high content XM channels like football and other channels. Wow that sounds great. I agree, I'd go for that but post-merger arrives and they could turn around they cut half of the sirius rock, pop, country and the other gendre channels and merge half of the same gendre channels from XM and consider that the same programming because we get the same number of channels. Some people would be pissed that they lost some of their favorite channels.
Or he could keep all the present sirius channels and add 40 more channels of shared XM content and water down the SQ so that I still get the same programming at the same price and Mel would argue he kept his word but we would get less SQ. He kept his word too when FCC rules said he had to "develop" and dual chip receiver but it didn't say that he had to make it publically available. He bent the wording of that rule I think??
He argues that the finances of the company are not the reasons for which he wants this merger and that its to give consumers more choice and a better product but seriously who is he fooling if this merger isn't about saving money by eliminating the present competition between himself and XM? Why not say that is what it is for? The reason is that he would get better consumer support for this merger if he used colorful and tempting statements like "More choices" , "lower prices", "better products" rather than say up front that he needs the money because both companies are struggling. Here at sirius pricing will be the same he says, for the same programming and more consumer choice but no one seems to care to ask what the SQ will be with all this merging of channels. Whats the definition of a better product? Is it more channels? Anyone care? I do.
I think you have to take everything Mel said with a big grain of salt right now and you have to consider that he doesn't only have the consumer in his best interest, he also has the share holders to take care of. As consumers I think we should have are eyes and ears open and not embrace his colorful sales pitch at face value. He must be questioned and he must answer these tough questions.
People here seem to take the wait and see approach of what going to happen post merger. Post merger will be too late. We need those questions answered pre-merger and I hope the FCC will do its job. Alot of people have to start realizing that by blindly accepting the carrot that is being taunted in front of us in terms of more choice and a better product can be a rotten apple after all is said and done if the road post-merger isn't clearly defined now because there is no turning back after you've eaten that carrot. by D0TC0M
- Jon by jon01