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Sirius XM Radio to offer the best of both services (sort of); Karmazin predicts success

July 30, 2008 | 12:28 pm

Howard Stern UPDATED: Mel Karmazin, the former Sirius chief executive who now heads the merged company, was a busy man today, appearing not only with Opie & Anthony but with Howard Stern and on CNBC. He told the business news channel that "the prospects for the combined company are extraordinary," and predicted $400 million in cost savings and positive cash flow by 2009. According to Stern's website (look under "Wednesday's show"), Karmazin said the question now was not if satellite radio will make money, but how much. He also said the government approval process was "dreadful." Given that Stern's show, like the rest of satellite radio, is not subject to federal indecency standards, Karmazin could have used a lot of other words.

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There's been so much attention focused over the past 17 months about whether Sirius and XM satellite radio would be allowed to merge, that what exactly would happen once the companies merged got lost in the shuffle. (Not an iPod shuffle, but the general bureaucratic shuffle in Washington, although Sirius and XM helped secure their merger by successfully arguing that they competed with iPods and other devices.)

Now that the nation's only two satellite radio companies have completed their merger, people are wondering what exactly the newly christened Sirius XM Radio will sound like -- and who'll be making those sounds. Crunchgear, for example, asks if the company will renew the contract of XM shock jocks Opie & Anthony now that they're colleagues of Sirius' multi-million-dollar mouth, Howard Stern (pictured to the left). On that point, Mel Karmazin, the chief executive of Sirius XM Radio, had little to say when he went on the Opie & Anthony show today, according to Crunchgear, which nevertheless viewed the appearance as a move to reassure the duo's fans.

On the broader question of what the future holds for the new Sirius XM, the short answer is: It's complicated.

The new company was vague about its future programming lineups in the announcement yesterday of the deal's closure. It said:

As a result of the merger, SIRIUS XM Radio will also be able to offer consumers new packages in audio entertainment, including the first-ever a la carte programming option in subscription media. In addition to two a la carte options, the new packages will include: “Best of Both,” giving subscribers the option to access certain programming from the other network; discounted Family Friendly packages; and tailored packages including “Mostly Music” and “News, Talk and Sports.” The first of the new packages will be available in the early Fall.

But there's a lot more detail in documents filed at the Federal Communications Commission, which removed the last regulatory hurdle when it voted 3-2 to approve the deal last week.

One of the major concessions the FCC got from the companies was that they would not increase their existing $12.95 monthly subscription prices for at least three years, nor reduce the number of channels in those packages.

But Sirius and XM customers, who have gotten used to simplicity (both companies offered only one package at the identical $12.95 price) now will have a somewhat confusing array of other choices.

With three months, Sirius XM must ....

... allow customers to choose whatever channels they want -- the a la carte offering mentioned above -- and introduce a radio capable of allowing them to do that.

There will be two a la carte offerings.

One for $6.99 a month will allow you to choose 50 Sirius channels from a subset of 100 Sirius channels (Sirius has more than 130); or 50 XM channels from a subset of 100 XM channels (XM has more than 170).
The other, for $14.99 a month, will allow you to pick 100 channels, with Sirius customers able to select from a company-determined "best of" XM's channels, and XM customers allowed to select from the "best of" Sirius channels.

Those programming selections haven't been released, but it's a good bet they'll include some exclusive content, such as XM's Major League Baseball broadcasts and channels featuring Oprah Winfrey and Bob Dylan. They likely will also include Sirius' National Football League broadcasts, NASCAR coverage and Howard Stern channels (he's so popular, he has two).

But for those options you'll need to buy a new radio that is capable of receiving individualized channel packages.

For customers who don't want to buy a new radio, there will be several other packages available within three months.

For $9.99 a month, customers will be able to choose either a "mostly music" package or a "news sports and talk" package. For $16.99, Sirius customers will get all their existing channels, plus the best of XM, and vice versa for XM customers. And finally, in a concession to FCC Chairman Kevin J. Martin, the companies agreed to offer a family-friendly version of Sirius or XM channels (presumably without Stern or Opie & Anthony) for $11.95 a month. There will also be a family-friendly "best of" offering that will cost $14.99.

Phew!

The details of these packages are still up in the air. Plus, the company is looking for cost-savings from the merger, so it's likely that some duplicative channels, particularly music genres, eventually will be eliminated.

-- Jim Puzzanghera

Puzzanghera, a Times staff writer, covers tech and media policy from Washington, D.C.

Photo: Howard Stern during his Sirius debut in 2006. Credit: Richard Drew / Associated Press

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