Mr. Karmazin Goes To Washington

3/09/2007 7:00 PM Eastern

Oppenheimer & Co. media analyst Tom Eagan maintained his “buy” rating on XM Satellite Radio and Sirius Satellite Radio, citing in a research report that he believes the proposed $13 billion merger between the two will pass regulatory scrutiny.

Eagan’s report came a day after Sirius CEO Mel Karmazin — who would maintain that role after the merger is completed — testified March 7 before the House Energy and Commerce Committee’s Subcommittee on Telecommunications and the Internet.

In that testimony, Karmazin clarified that existing subscribers to both XM and Sirius would not experience rate increases for the services they already buy. For additional services, the cost would be less than the combined monthly charge for both services.

Both XM and Sirius currently charge about $12.95 per month for service.

When asked to quantify the discount subscribers to the combined service would receive, Karmazin said it would be “closer to $10 [per month] than $2 [per month].”

Karmazin also said that while the combined entity would not offer programming a la carte, it would consider tier packages.

Eagan wrote that while Congress will not have as large a role in deciding the fate of the merger as the Federal Communications Commission and the Department of Justice, it was “helpful to assess the overall atmosphere in Washington.”

Next up for XM and Sirius is a March 20 review by the Senate judiciary committee’s antitrust subcommittee.

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