Sirius, XM to Offer Reduced Price Plan After Merger
Satellite radio customers will get the option to pay a lower price for just the channels they want if the industry's two big providers are allowed to merge, Sirius Satellite Radio said in a securities filing of its bid to buy XM Satellite Radio Holdings
The statement comes as Sirius with XM seek to assuage regulatory concerns that their deal, to be paid for with stock valued at $4.7 billion when it was announced Feb. 19, will create a monopoly that would harm consumers.
The Sirius filing said the deal would generate cost savings from efficiencies that could allow the company to offer "a la carte" programming at a price below the current $12.95 per month subscription fee.
An a la carte option would allow customers to pay only for the channels they want to receive. Combined, Sirius and XM currently offer more than 300 channels of programming. But some of those stations are identical and many more feature similar formats and genres.
"Customers may elect to receive fewer channels at a monthly price lower than $12.95; substantially similar programming at the existing $12.95 price; or more channels, including some of the 'best of both' networks, at a modest premium to the cost of one service," Sirius said in the Securities and Exchange Commission document.
Sirius also said the combination would increase the diversity of programming by eliminating redundancy that would free channel space for additional channels.
The filing comes a day after Sirius CEO Mel Karmazin appeared at a Senate subcommittee hearing to face questions about the proposed deal's effect on the competitive landscape.
During the hearing, Sen. Herb Kohl, D-Wis., questioned Karmazin's stance that the combined company would face competition from terrestrial radio, MP3 players and Internet radio.
"Satellite radio is a small part of a highly competitive and ever-expanding market for audio entertainment," Sirius said Wednesday.
Kohl also voiced concern that the combined company would raise prices in the future, particularly if it signed exclusive contracts with sports leagues or popular entertainment providers. Karmazin said he was open to regulatory oversight of price increases as a condition of the merger.
Karmazin also told the panel that subscribers would be able to block programming they find offensive if the government approves the deal.