Karmazin to Rebate Adult-Fare Blockers


Embracing an idea espoused by Federal Communications Commission chairman Kevin Martin, Sirius Satellite Radio CEO Mel Karmazin promised Tuesday to provide rebates to satellite-radio customers who block “adult” programming.

Karmazin made the pledge in testimony before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights on the $13 billion merger between Sirius and XM Satellite Radio. The two companies filed the merger with the FCC Tuesday, he said.

“What we have said in our [FCC merger] application is that anybody who chooses not to receive any content, any adult content, not only has the ability to block it, but there would be a cost reduction to their bill in a more a la carte way,” Karmazin said.

He limited his promise to “adult” programming, such as the Playboy Radio channel carried by Sirius, He wasn’t specific about how the size of rebate would be determined or issued. 

Sen. Sam Brownback (R-Kan.), a GOP presidential candidate who sponsored the law that raised FCC indecency fines to $325,000 per offense, asked Karmazin if he would agree to comply with FCC rules that ban indecent material on terrestrial radio from 6 a.m.-10 p.m. 

“No, I would not,” Karmazin said. 

The FCC needs to approve the XM-Sirius merger, which has run into a wall of critics who say the deal would create a satellite-radio monopoly. Martin has said that the deal has to clear a high hurdle, in part because FCC rules already ban the common control of both satellite-radio licenses.

Some media executives have embraced an assortment of content-control ideas, including a la carte plans, family tiers and extension of the FCC’s broadcast-indecency rules to cable and satellite TV. But Karmazin was the first to embrace the block-and-rebate approach, albeit for a narrow class of programming.

Karmazin’s proposal is one that Martin has urged on cable- and satellite-TV companies, without much success. Comcast and Time Warner Cable have rolled out family tiers devoid of indecent content as a compromise between the status quo and a full-fledged a la carte regime also pushed by Martin.

“Nearly every economic study has concluded that a la carte would drive up prices, reduce choice and lessen diversity in cable programming,” said Brian Dietz, vice president of communications at the National Cable & Telecommunications Association.

At a House hearing last month, Karmazin rejected an a la carte model, saying it couldn’t be done “for a lot of technical reasons.” Evidently, a block and rebate system is technically possible.

“We are making sure that the parents have all of the information on that content and they can restrict it and not pay for that service,” Karmazin told the Senate panel.

Sirius, available to 6.02 million subscribers, is also the pay-radio platform of shock jock Howard Stern, well-know for his adult brand of humor.

Dan Isett, director of corporate and government affairs for the Parents Television Council, said he was interested in knowing whether Sirius customers would see a reduction in their $12.95 monthly bills if they blocked Stern’s show.

“There is no reason why customers should be forced to subsidize Howard Stern to get access to Major League Baseball,” Isett said.