Congress to Study XM, Sirius Merger

By Ed Oswald, BetaNews

February 22, 2007, 2:46 PM

Congress plans to hold hearings into the merger of satellite radio providers XM and Sirius next Wednesday, with the House Judiciary Committee slated to ask CEO designate Mel Karmazin and others how the merger benefits consumers.

Most analysts agree that much of the political opposition will come from Democrats, and say that now is the best time to push through any merger. If Democrats take over the executive branch in next year's elections, such a merger may be near impossible.

Even with a Republican-controlled FCC though, it still appears as if it will be difficult for the two satellite radio companies to make their case. Current language within the spectrum agreements with XM and Sirius require that there be two satellite radio operators.

"It's a very high hurdle that they would have to meet to demonstrate if it's in the consumer's best interest," FCC Chairman Kevin Martin said. Any merger would require a change in those agreements.

The newly created House Antitrust Task Force will hold the hearings. Created by Rep. John Conyers (D-MI) to address antitrust and competition policy issues, the XM-Sirius merger would be the first item on the panel's agenda, and would include both Republicans and Democrats.

"Digital music is at the cutting edge of technology and innovation," Conyers said in a statement. "We are holding this hearing to allow Members to probe whether this merger will enhance or diminish competition in the digital music distribution industry."

Ranking member Rep. Lamar Smith (R-TX) added that the panel would also look into the two companies' claims that satellite radio competes against terrestrial radio, the Internet, or other emerging technologies as part of the overall hearing.

"Consumer's interests should remain our top priority," he added.