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Sirius, XM cite benefits if merger wins approval

From Reuters

Satellite radio providers Sirius and XM said Monday they could offer a variety of subscription packages that cost as much as 46% less than current plans if their merger is approved.

In a bid to allay concerns among lawmakers that their merger would raise prices and limit programming choices, the companies announced several new packages that they say offer subscribers more choice than they can individually.

Under one package, customers could pick 50 channels on either Washington-based XM Satellite Radio Holdings Inc.'s or New York-based Sirius Satellite Radio Inc.'s systems for $6.99 a month. Additional channels could be added for 25 cents apiece. Currently, subscribers of either system pay about $13 a month for more than 100 stations.

“We need to build the subscription business base of satellite radio to strengthen our business and better leverage our high fixed costs,” Sirius Chief Executive Mel Karmazin said in Washington. “We are confident that a lower price point [and] more programming choices will help us do just that.”

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The XM-Sirius deal, which would combine the only two providers of satellite radio service in the U.S., currently is being reviewed by both the Federal Communications Commission and antitrust authorities at the Justice Department.

The two companies, which together marked more than $1.7 billion in losses in 2006, said the so-called a la carte packages would work only on satellite radios that have yet to be sold by either company. Other packages will be available on existing satellite radios.

Karmazin took to task the merger’s toughest critic, the National Assn. of Broadcasters, saying the radio industry lobbying group had argued the merger would result in higher prices.

“This [plan] should finally put this false argument to rest once and for all,” he said.

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In a statement, the NAB’s Dennis Wharton said policymakers should not be “hoodwinked” by the announcement.

“Nothing is stopping either XM or Sirius from individually offering consumers a more affordable choice in limited program packages,” he said. “Moreover, after reading the fine print, one discovers that XM and Sirius customers have to buy a new radio for an undisclosed fee to reap the alleged rewards from today’s announcement.”

Shares of Sirius rose 9 cents Monday to $3.21, while XM fell a dime to $12.55.


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