By Peter Kaplan
WASHINGTON (Reuters) - The chairman of the U.S. Senate's antitrust
subcommittee on Wednesday urged regulators to block Sirius Satellite
Radio Inc.'s proposed acquisition of XM Satellite Radio Holdings Inc..
Democratic Sen. Herb Kohl of Wisconsin said he had sent a letter to the
Justice Department and the
Federal Communications Commission calling on them to oppose the deal on
grounds that it would cause "substantial harm to competition and consumers."
"Such a result should be unacceptable under antitrust law and as a
matter of communication policy," Kohl wrote to FCC Chairman Kevin Martin
and the Justice Department's antitrust chief, Thomas Barnett.
Sirius plans to buy XM in an all-stock deal worth about $4 billion. The
deal would combine the only two providers of satellite radio service in
the United States and has sparked concerns among some U.S. lawmakers and
The deal is currently being reviewed by both the Justice Department and
the FCC, which issued both satellite radio licenses in 1997 on the
condition that the two companies would never merge.
Although they can exert political influence over the agencies generally,
lawmakers have no direct input into the decisions about individual
In testimony before Kohl's subcommittee and other congressional panels,
Sirius Chief Executive Mel Karmazin has promised that the combined
company would not raise prices, and that customers would be able to
block adult channels and get a refund for those channels.
Karmazin has also argued that the deal would not be anti-competitive
because satellite radio faces competition from other forms of audio like
traditional AM/FM radio and personal audio players.
But in Wednesday's letter to the agencies, Kohl said he was unconvinced.
Terrestrial radio is too limited to compete with satellite radio, while
personal audio players can not match the programming of satellite
service, he wrote.
"No other technology available today is a substitute for the satellite
radio," Kohl wrote.
Beyond that, Kohl said, other possible alternatives are years away from
being available to consumers.
"Uncertain promises of competition from new technologies tomorrow do not
protect consumers from higher prices today," Kohl wrote.