Karmazin on Howard Stern: Sirius-XM Merger Odds "Better Than 50 Percent"
By Ben Grossman -- Broadcasting & Cable, 2/26/2007 8:48:00 AM
Sirius chief Mel Karmazin reiterated his confidence Monday that the proposed Sirius-XM $13 billion satellite radio merger would clear regulatory scrutiny, putting the odds it would go through at “better than 50 percent.”
“There is a sense in Washington that big is bad,” Karmazin said Monday on Howard Stern’s radio show on Sirius. “I’m confident when they take a look at what the advantages of this one are, they will approve it. I can’t come up with any disadvantages really for the consumers.”
The first step for Karmazin, who would head up the new company should the merger go ahead, is facing the House Judiciary Committee's new antitrust task force this Wednesday, February 28.
He already held initial meetings with all five FCC commissioners in person two days after the announcement.
At those meetings, he argued that satellite radio competes with all audio entertainment and that the proposed merger is not one of two very profitable companies looking to squeeze consumers.
When asked whether the commissioners seemed to buy into the arguments, Karmazin laughed.
“I’ll let you know when they vote,” he said.
Karmazin also claimed the fact that terrestrial radio companies usually mention satellite radio as a competitor in financial filings strengthens his argument that XM and Sirius would not be creating a monopoly.
“It really proves the point we are competing with terrestrial radio,” he said. “It is very hard for someone to be talking about a monopoly of satellite radio. There is no satellite market, there is an audio entertainment market.”
But that point is one of contention with many, including NAB spokesman Dennis Wharton.
“In coming weeks, policymakers will have to weigh whether an industry that makes Howard Stern its poster child should be rewarded with a monopoly platform for offensive programming,” he said recently. “We're hopeful that this anti-consumer proposal will be rejected.”
Karmazin acknowledged his company’s challenges with the NAB, of which Sirius was actually a member when Karmazin first joined the company in November, 2004 .
“When I first came to Sirius, I reached out to them and said, ‘Hey, we are all in the radio business together,’” Karmazin said, comparing the NAB’s stance to the way it reacted years ago to the then-burgeoning cable industry. “But for 17 years they have been talking out against satellite radio and trying to stop satellite radio from happening.”
As for the merger itself, Karmazin said he also reached out to XM to begin a dialogue shortly after taking over as Sirius CEO.
While he claims Sirius will survive should the merger get shot down in Washington, he says the sides came to an agreement now because of the financial realities of two businesses struggling to turn a profit.
“The big catalyst is the stock prices have gotten so low that when you take a look at the value creation of the merger, it became something neither company could ignore,” he said.
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