Sirius; XM; Congress

Sirius Satellite Radio CEO Mel Karmazin, as quoted by the Washington Post, is the soul of disingenousness in this story about the proposed merger of Sirius and XM.

Karmazin, who will face skeptical members of the House Judiciary Committee's newly formed antitrust task force, says satellite radio is in stiff competition not only with free, over-the-air radio but also with such newer products as MP3 players, Internet radio and music-downloading cellphones. "What I need to do is lay out the realities of the marketplace as we see it," Karmazin said in a telephone interview yesterday.

This is ridiculous on its face. Sirius and XM entered a radio market in which free, over-the-air radio already existed, and everybody from free radio to record companies is competing with MP3s. That's the business Sirius is in. Compete. If you succeed, you succeed. If you don't, you don't. Quit whining.

Sharing a witness table with opponents from the broadcast industry and consumer groups, Karmazin said he will remind Congress that XM and Sirius charge customers about $13 a month and struggle to attract enough subscribers to make money. "It's a little hard for me to understand" the argument that a merged company would raise prices or reduce service, he said.

It's hard for Karmazin to understand the argument that a monopoly would raise prices or reduce services? Then, why is he even mentioning the fact that the companies, as they compete against each other, can't charge their customers more than 13 dollars per month? If they could charge more, they would. The reason Sirius can't charge more than it does is because if it does, it will lose customers to XM. With the exception of those who have subscribed to satellite radio for specific content, such as Howard Stern or Air America Radio, most listeners regard satellite radio as a commodity. They'll buy the cheaper one.

The two companies are spending millions of dollars fighting to develop content that will appeal to the largest group of listeners. This benefits listeners. A monopoly won't continue to expand the envelope for new content for the simple reason that it won't have to. Why are we supposed to believe the companies want to merge, if not for the twin benefits of reducing production costs and increasing subscriber fees? Does Karmazin think we're stupid?

If this is the best argument Sirius and XM can come up with for why they should be allowed to merge, the Justice Dept. and the FCC should dismiss it out of hand.