Karmazin Toasts NAB In Sirius-XM Merger Approval
July 30, 2008

It was a long, arduous battle that is finally over for the man that had the vision of combining the two satellite companies into one entity.  And judging by his conversation today with Opie & Anthony, Sirius XM Radio CEO Mel Karmazin is giving plenty of recognition to one entity he feels helped make the merger become reality - the National Association of Broadcasters

Karmazin made two appearances this morning before heading to a town hall meeting with Sirius employees.  His first stop was The Howard Stern Show and then he dropped in during O&A's XM program. With much on their mind, such as the renewal of their expiring XM contract, O&A decided to start the conversation with merger related talk, asking Karmazin if he thought the merger approval process would take as long as it did. 

"I believed it should get done," replied Karmazin. "But, throughout the whole process I really questioned whether it would get done. There were legitimate reasons for concern.  Did I think it would take this long?  Absolutely not."

As the conversation progressed to the strategy for getting approval, Karmazin made a point that the NAB's objection to the merger actually played into his hand for getting approval.

"We needed the broadcasters to be very aggressive in opposing the merger," said Karmazin. "We had the benefit now of all of these people saying, 'Stop the monopoly.' The smart people in Washington were saying, 'If this is a monopoly, why do you care?' The fact that you care and the fact that [the NAB] spent so much money and the fact that terrestrial radio broadcasters lobbied so hard proves that we're in a competitive market that would at least include the 10,000 AM and FM radio stations.  [And with] the technology changes that continue to go on - Internet radio, iPhones, whatever is out there - there will be more [competition]. The fact that this merger occurred is great news, but there are still a tremendous amount of competitors out there that we compete with."

Karmazin also revealed he had the benefit of being at a terrestrial broadcasting company when satellite radio was in its infancy stages.  "I couldn't see any good reason why satellite radio was necessary coming from a very, very successful terrestrial radio company," he explained. "There was nothing in it for me with satellite radio. All I knew was when you got into your car you had an AM and an FM button. The last thing I wanted you to have was an XM button.  The worst nightmare came when satellite radio started to grow and the broadcasters did everything they could to make it fail. Their goal was not to just stop the merger. The reason they wanted to stop it is they believed as stand alones we would be weaker [and] maybe fail. The fact is the broadcasters hope was not that the merger wouldn't happen, but satellite radio would disappear."

Continuing on about the NAB's tactics, Karmazin said, "One of the things they did, which I can't tell you how much influence it had, cause I really don't know [as] it really got down to the very end [with the FCC vote tied] at 2-2, is they put a banner on their building that said, 'Stop The Monopoly.' We took pictures of it and sent it to everybody who was on our list. Our viewpoint was, the fact that they were doing it... they're not lobbying every merger that goes on, why would they care?  If we are a duopoly on our way to a monopoly, by definition, they are not in that pie.  Thank goodness for it and hats off to the head of the NAB. We all owe him. When we all get to toast this merger, I will be celebrating him first."

When Opie suggested Karmazin was rubbing it in, the CEO replied, "If I knew he was listening, I would be doing more."

Karmazin also revealed "a very influential senator obviously very close to the NAB" privately asked him to agree to the same indecency rules that broadcast radio has in order to have his support for the merger.  Mel had a simple answer for the senator, "No."

Discussing the future of Sirius XM Radio, Karmazin said the combined companies give it $2.2 billion of revenue "which makes us the second largest radio company in the world. Only Clear Channel is bigger than we are in radio and we're growing it, they're not. If you combine the number of subscribers, we have about 19 million. The only company in the subscription business that is bigger than us is Comcast.  We now finally have a critical mass, big company."

He also relayed that there will be an opportunity to get Sirius programming in the next two to three months on XM, with consumers using the same receivers they have now.  It will be select programming with Howard Stern being the only content Mel would confirm along with "selected sports programming and other programming."  He also said the same thing will happen with XM programming on Sirius receivers.  

 




 
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Jon Zellner
SVPP, iHeartMedia

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