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XM-Sirius Announce a la carte Pricing - Pending Merger Approval

It's the one thing that Federal Communications Commission Chairman Kevin Martin has been sweet on: a la carte pricing to give the consumers ultimate control over what they pay for. The cable companies have resisted - but Sirius chief executive Mel Karmazin has announced intentions to offer a la carte pricing - if the merger of Sirius and XM Radio is approved.

He's even offering details: The first package is 50 satellite radio channels for $6.99 per month, a 46 percent savings over the get-all-of-the-channels-for-$12.95 package - currently the only option. Extra channels would be as little as 25 cents each - and the price would cap at $12.95. Need a bigger lineup than that? For $14.99, pick your favorite 100 channels. In addition, there are a number of other packages that will be available - a "best of" Sirius and XM for $14.99 and a Sports-News-Talk package for $9.99, among others. (Check out the full press release with a lineup of the proposals.)

The announcement comes as momentum has been on a slight upward swing for XM and Sirius. When it was announced, the merger was quickly criticized as being monopolistic. In Washington, the National Association of Broadcasters has campaigned hard for blockage - including a large banner hanging from its Connecticut Avenue NW building. Many members of Congress have also spoken out against it. But the public comment and subsequent reply period - which ends tomorrow - brought out a number of filings from community interest groups in support of the merger. Karmazin will formally introduce the proposed pricing plan at a lunch at the National Press Club this afternoon.

In addition, Wall Street analysts have recently become slightly more optimistic, noting that the merger, if analyzed solely on its merits (read: no politics), could possibly be approved. And Clear Channel Communications said earlier this month that if the merger is approved, the FCC should also relax media ownership rules so it can buy more radio stations to better compete with satellite radio.

A la carte pricing may be the way to win over consumers and the FCC. What do you think?

By Sam Diaz  |  July 23, 2007; 10:52 AM ET  | Category:  Sam Diaz
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Comments

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Interesting way to do it, letting the users pick what channels they like. Makes me feel better about the merger. I doubt I listen to more than 25 or so on a regular basis, so the price point is good - I wonder how it works on a "family" plan.

As for Clear Channel - I didn't realize that there were enough radio stations left to buy that they'd really care....

Posted by: Chasmosaur | July 23, 2007 11:52 AM

Would it be $6.99 for any 50 channels of my choice? This is too good to be true. Does anyone out there really listen to all of 150 channels available? I know I listen to no more than 10, and if the merger comes thru, I'll have 12 channels, just add Sirius' 2 Dance stations.

I think there still will be a catch, if it's too good to be true, it probably is.

Posted by: Slav Kortas | July 23, 2007 12:11 PM

Where does that leave those of us that pre-paid 3 years of service?

Posted by: Lynn | July 23, 2007 12:13 PM

There are too few examples of monopolies being good for the American public. Put the two companies together and you get two 60's stations, two 70's stations etc. The services are just not different enough to warrant the merge. As far as the pricing lure - older folks have seen this movie before. Once the monopoly is forged, the rules change all too quickly and everyone wonders how it happened.

Posted by: Ramsey | July 23, 2007 12:17 PM

It said something about new equipment in the press release which has me worried. I just want to know if I can pick for example 25 channels from XM and 25 from Sirius and be able to play it through my stock XM stereo in my Honda???

Posted by: J | July 23, 2007 12:34 PM

I still don't understand. When was this ever a good business model? Pay for Radio? While meanwhile there's too many free stations? Radio is almost always in peoples background and secondary, and that was before the internet.

Quite frankly it was a stupid idea back when it was proposed, and it clearly hasn't become any smarter

Let it die. Now. A merger just stretches out the time it takes before it turns belly up, and keeps a few folks with phony baloney jobs and bloated salaries.

Posted by: plays with radios | July 23, 2007 1:18 PM

We pay for radio because the "free" radio stations don't play the music we want to hear. This is the 40th anniversary of the Summer of Love, but try to find the music from that era on "free" radio. It's not there.

Posted by: Oldies in SF | July 23, 2007 2:35 PM

I don't spend enough time in my car listening to the radio to want to pay for it. I've got CD's to listen to. But for my friends who do I hope that it would be true "pick your own" and not packages like Dish and Direct TV have.

Posted by: Joe | July 23, 2007 2:59 PM

Ask your father, if he's still alive, what music he was listening to in high school or college. XM has a channel just perfect for my 69-year-old dad. He wouldn't be able to load an iPod with those songs, nor are their CD's to fill that void, yet he's able to listen, commercial free, to music from his youth every time he drives his car. There are people that would never dream of paying for TV service either. If rabbit ears and commercial radio are OK to some, please don't rain on our parade just because you don't "get it."

Posted by: ramsey | July 23, 2007 3:04 PM

I haven't listened to 'Free Radio' in years. The pay model may not make sense to those who haven't tried it, or consider it background noise anyway. For me, I listen at work (sort of like Muzac, but with sustance) and with out the annoying DJ's of drive time I have a better commute. And drving on vacation across wide open spaces also is more enjoyable with satellite.

The al la carte idea sounds great, but like others I wonder about those of us who prepaid for years (in my case 5). Hopefully they will show some respect for their long-time subscribers and early adopters.

Posted by: CraigW - AZ | July 23, 2007 3:13 PM

I don't understand someone complaining about paying for radio. It's up to the consumer. I personally thought it was stupid to pay for radio till I got XM for a present. Now I can't think of ever going back to free radio.
I hope the merger goes through. I love the "a la carte" option proposed.

Posted by: Paul Grochowski | July 23, 2007 3:23 PM

I am concerned that picking stations will lead XM or Sirius to dump less popular offerings, which overtime will lead to a dumbing down of satellite radio -- just like on broadcast radio. As someone who spends most of his time on such stations -- the folk channels or opera and others -- I want to make sure they continue. That's why I subscribe in the first place.

And, yes, considering I'm also paid up through 2010, I do wonder if I will get a rebate.

Posted by: DC L | July 23, 2007 3:32 PM

I apparently misunderstood the purpose behind the proposed merger. I thought the virtue of the merger was that two marginal businesses would combine to form a single, profitale business. The advantage to shareholders would be in eliminating duplicate overhead costs. The advantage to consumers would be a single source combining the best programming from both companies. Duplicate music channels could be eliminated. This announcment suggests there will be no combining of programming. Both companies will continue to offer its own list of channels, and the only advantage of the merger to consumers is, for an extra fee, we get to add a few channels of the now competing supplier. Big deal. While Ala Carte packaging makes sense conceptually, as its presented here, consumers really derive no benefit from the merger synergy. I am finding myself disuaded from supporting this venture.

Posted by: Beagle | July 23, 2007 3:32 PM

Media consolidation has been a disaster, and this merger would make it worse by creating a monopoly in satellite radio. The meaning of "the public airwaves" was forgotten at some point, and they became the private property of outfits like Clear Channel. It is time to go back to the system under which nearly every broadcast outlet had a unique owner. Back then, you could turn on the radio in the case of severe weather, a derailed train causing a chemical leak, or other disaster and find out what was going on. Now, your "local" radio stations are usually remote controlled and do no public service in exchange for the use of our public airwaves at all.

Posted by: Matthew Brown | July 23, 2007 3:34 PM

I'm sure that there is a catch - I hope it is exposed sooner rather than later

Posted by: bstod | July 23, 2007 3:40 PM

PS - As long as Opie and Anthony stay, I will be a customer - - - LONG LIVE O+A!!!!!

Posted by: bstod | July 23, 2007 3:41 PM

Make it totally a la carte. You just know that the packages they are going to offer are going to cause everyone to be paying more in the end. I love satellite radio, but Mel Karmazin is going to have his hands in everyone's pockets. As for Clear Channel, they should have been boycotted years ago.

Posted by: mick | July 23, 2007 3:42 PM

I concur! O+A PARTY ROCK!!!

Posted by: gateway | July 23, 2007 3:43 PM

Comcast should do this. My cable bill is now $75/month. I'm about ready to drop it.

Posted by: Burt, College Park | July 23, 2007 3:51 PM

To those who don't understand the satellite radio thing...

I heard an interview once with one of the XM executives. Someone asked them why - when you could buy CD's or attach your MP3 player to your radio - would ANYONE want to pay for radio?

He gave a lot of the answers noted above, but then he said something about the "serendipity" of radio. The part of radio where there's a song you love, but it's not part of your music collection and you're totally jazzed to hear it. Or better yet - you hear something new you would have missed by sticking to your personal music collection instead of the radio.

There's also another reason - I moved from DC to the Midwest. In my town, we have a BUNCH of ClearChannel stations, most of which are country/western, the remaining are bubble-gum pop. I listen to neither...but XM works just fine.

Posted by: Chasmosaur | July 23, 2007 4:14 PM

Pay for radio? Get with it.
Some of my neighbors pay extra to buy bread at the store. Flour, yeast and water are far cheaper.

Posted by: Josey | July 23, 2007 4:33 PM

Someone stated "in my car". I have mine set up with my stereo system in the living room most of the time.
I think at least half of the negative comments about satellite radio come out of ignorance. The providers and the potential customers need to do more to get the word out.

Posted by: Steve | July 23, 2007 4:37 PM

I'm 27 years old and I love my Sirius Radio. I listen to a solid dozen stations regularly. 90s Alternative, 6 stations of Classic Rock that don't step on each others toes. 80s Pop. 80s Hip Hop. Death Metal.

My two favorite stations are Octane and Faction. Octane is like a more eclectic standard rock format and Faction is more eclectic still, Following Rage against the Machine with the Ramones. Dr Dre with The Offspring. And introducing me to new bands with little airplay on testicular radio like The Lords.

Then there's the comedy. 4 stations that play tracks off of comedy albums like regular radio stations play music. I have an alert on Lewis Black. When Black comes on I get a note to my reciever letting me know he's on another channel.


Then theres the TIVO functionality. I can pause and rewind on a whim. When I get into my car, I rewind 45 minutes back and I fast foward to skip songs I don't like. If I get a call in the car or I have to make a stop, I pause.


I LOVE my Sirius. It's a great technology. No static. I can drive from NJ to Florida without looking for new stations. And I can't imagine going back to the way it use to be.

Posted by: Joe | July 23, 2007 4:40 PM

I work out of my vehicle, and drive over 13 counties in Florida. I got Sirius 2 1/2 years ago, because all you could get was Rush, Bill, or Sean on talk radio, and more commercials than music, on music stations. I purchased SIRIUS because of the two NPR channels which XM didn't offer. But I also enjoyed CSPAN, PRI, and Air America, all of which have been cancelled. I'm not big on monopolies. I sell petroleum products, so I know about power run amok. I haven't been happy that SIRIUS has reduced my choices. Whose to say that a merged company won't be as arbitrary even though it is starting out offering you more?

Posted by: Kenny, Bradenton, Fl | July 23, 2007 4:46 PM

Now I wish the FCC could apply the same thinking to local cable channels and get them to offer lower-cost a la carte pricing!

Posted by: Patrick | July 23, 2007 4:58 PM

And let's hear it for MLB radio on XM. I'm not dragging the computer around with me to listen to games on Gameday; with XM I'm not tied to the house for my out-of-market team's games.

Posted by: Oldies in SF | July 23, 2007 6:18 PM

They're worrying about satellite radio?
Why not put the resources toward Cable company pricing and the credit card interest rate scams...


Posted by: Anthony | July 23, 2007 6:27 PM

Why not let the consumers decide?

Send survey's to all paying customer's asking if they'd prefer the merger....

Posted by: Anthony | July 23, 2007 6:28 PM

I really like Sirius but the requirement for subscribers to buy new equipment really burns me up. My unit is only 2 years old and works fine. Why should I need to shell out more $ so they can profit by a merger.

When Cingular bought AT&T, I wanted to add a second cell line. Because of the merger, they required me (the primary account holder)to buy a new phone (at full price) since they were migrating to Cingular's equipment. Why should I pay for their merger.

While the new pricing plans look good, the consumer is not the object of the merger. It is always the top execs, banks and financial advisers who win. If the deal goes through, just wait for the story in the Post of how well these guys got paid.

Posted by: New Wave | July 23, 2007 6:30 PM

What I think is funny is how people keep debating whether this is "in the best interests of the consumer". Wake up people. Clear Channel pays the lobbyists, the lobbyists pay the politicians and then the politicians say, "We decided against it because we heard the consumers say that they didn't want it."

Why are people fooling themselves that this has anything to do with the consumer?

Posted by: Brian B | July 23, 2007 7:32 PM

I listen to XM's 60's on 6 and 70's on 7 all day long at work. I gave Sirius a try, and as far as these eras go, XM has Sirius beat hands down. I'm afraid that after the merger, the quality of everything is going to suffer. Once again, the listener will get no choice.

Posted by: Len | July 23, 2007 8:02 PM

I listen to XM's 60's on 6 and 70's on 7 all day long at work. I gave Sirius a try, and as far as these eras go, XM has Sirius beat hands down. I'm afraid that after the merger, the quality of everything is going to suffer. Once again, the listener will get no choice.

Posted by: Len | July 23, 2007 8:02 PM

Nobody will have to buy a new receiver. The same selection will be transmitted over both technologies.

Posted by: Mel K | July 23, 2007 8:18 PM

Is there any clarity for the various sports leagues who are solely on one company right now For instance, I lost the various SEC schools when it moved to XM, but got NASCAR when it jumped to Sirius? I'd love to bebale to pick my sports.

Posted by: Atlanta Elvis | July 23, 2007 8:36 PM

After owning a car equiped with XM I have to admit that there is no way I would ever go back to regular radio. The valid reasons I could see against this merger is being afraid that you might lose your favorite station. The Ala Carte system seems to be perfect as some of my friends have Sirius and I've found that I like soem of their stations. Now I can have the best of both worlds. I'm not sure exactly how this merger becomes a monopoly because its competition is regular radio which is free. This isn't even like satellite vs. cable where you have to pay for one, pay for satellite radio if you want it. The alternative to this merger is likely bankruptcy for two non-profitable competing companies.

Posted by: Garrett | July 23, 2007 9:10 PM

This is America , you pay for what you want. My youth was in was 60's , I love to listening the commerical free channels . I don't travel like I use to do. I would have XM Radio in the car if I were still working. I remember , going across the country with FM channels fading away. I sure have XM Radio in the house. Plus, it is online too. Look, what you pay for a HD Radio unit with less channels.

Posted by: Barrington A | July 23, 2007 9:17 PM

Cox should do something like this. My cable and internet bill is something like $170/month.

Posted by: Victim | July 23, 2007 9:19 PM

Satellite radio came down to those two deliberately, they were the only ones allowed a license for it.

Here's an idea: you want more choice in radio, whether traditional "free" or otherwise? Allow virtually anybody to air content. While you're at it, dead the looming fees on netcasters also. The whole reason that free radio sucks these days & pay radio is a monopoly is because the system was designed that way.

Posted by: brian | July 23, 2007 9:26 PM

"And Clear Channel Communications said... the FCC should also relax media ownership rules so it can buy more radio stations to better compete with satellite radio"

And people are worried about Sirius-XM becoming a monopoly?

This is all politics, anyway. All this concern over two struggling satellite radio companies, yet ExxonMobil is allowed to become the largest energy company in the world. Gimme a break.

Posted by: Vomit God | July 23, 2007 9:27 PM

When they got into the business, they were FINE with the law that said, you can't merge. Now they want that law changes, and they are saying they are FINE with low/ala carte pricing. That will change too.

Sirius is on the ropes. I hope this deal does not go through.

Posted by: RL | July 23, 2007 9:40 PM

I would re-sign (sign back up again) if I got to choose a limited number of channels for 6.99. I had XM but when it lost NASCAR I let my subscription expire. Go for it

Posted by: bob | July 23, 2007 10:39 PM

I think the idea of alacarte pricing would be a great idea since I only listen to no more than 10 channels. I use my primarily in my garage and leave it going 24/7 for my dogs! Also when I am down in the garage working. I take it with me when we go on long trips to dog shows but rarely listen to it because we listen to audiobooks all the time. Paying only $6.99 a month would be great because over 30 days it would only cost me pennies a day.

Posted by: Mike | July 23, 2007 11:42 PM

How long before the a la carte pricing discounts mean that they are going to have to start airing commercials to be profitable?

Posted by: mick | July 24, 2007 12:05 AM

I can't believe anyone thinks this is a good idea. They won't let you get just 10 channels, at least after a couple of years. They're eventually only going to offer BS packages like 'News'($6), 'Sports'($8), 'Music'($10) and 'Entertainment'($6).

If you're like me and you like to hear the news in the morning, catch some baseball in the afternoon, listen to music on the way home and listen to comedy on road-trips you'll have to pay at least $30.

Then they'll advertise their great new service "as low as $6, anything you want under $10".

It'll be just like my Comcast, I get 12 damned HBOs. Why can't I instead get 1 HBO, 1 Showtime, 1 Cinemax and 1 porn channel and pay half what they charge me for my 11 useless HBOs?

Oh yeah, no competition. True and fair A la carte pricing will NEVER happen, it's just not a money-maker.

Posted by: Jeff | July 24, 2007 12:17 AM

I don't believe in paying for free radio, so I've never heard Sirius or XM Satellite. But the only time I wish I had satellite is when travelling by car and forever fiddling with the tuner to get a decent station. The success of the merger might bring lots more shows, so what happens if I initially pick my 50 stations and new shows come on? Will I be able to exchange some of the "fillers" for new shows, or am I stuck with additional fees?

Posted by: Clark D | July 24, 2007 10:15 AM

Ba-Ba-Booey! Ba-Ba-Booey!

Posted by: Gary | July 24, 2007 2:20 PM

With a la carte I'm worried about economy of scale.

Why do XM and Sirius offer such a variety of stations? Because if everyone gets everything they can sustain a larger variety of music on their lineup than if everyone got only their favorite handful of stations. And while the most popular stations may be the big selling point, the many obscure ones are what make it really valuable. With a la carte I'd be worried that too many people would opt only for the mainstream channels and the others would get left behind. For instance with XM's lineup, a lot more people would choose to subscribe to Ethel than XMU--how long before XM would say "XMU just doesn't have the listenership to be profitable; let's kill it"?

This is what has happened with normal radio stations, if people choose exactly what they get to listen to then it's just a popularity contest--pop music and nothing else.

Posted by: BR | July 24, 2007 4:00 PM

When I bought my subscription and radio I was a road warrior. With the cost of gas it was easier to change my living location and eliminate my commute. But this summer I will be all over SoCal and I know that 50 channels won't get old.

I was about to sign up for a life time subscription just because I think this is a great value. I wonder what will happen then. I still have 17months left of this subscription.

Let's see.

Posted by: Old Road Warrior | July 25, 2007 10:15 AM

I like the idea. Let's make sure listeners have to pay premium pricing for the most expensive offerings.......like Stern and Oprah.........

Posted by: Jaredd | July 25, 2007 1:13 PM

There's one thing behind this merger. Sirius was stupid enough to sign Howard Stern to an insane contract that it can't afford. (Remember the Texas Rangers and A-Rod?) Now it's looking for a way to spread the pain. The FCC should turn down the merger, forcing Sirius out of business and Stern (and Mel K, the incompetent snake-oil salesman) out on the street. Let the free market (and XM, a service of true quality) rule.

Posted by: Fred Q | July 25, 2007 2:03 PM

I have a Sirius radio in my car and I get XM with my DirecTV subscription at home, so I can listen to both services. They are very similar, with stations that carry almost identical content. Sirius has some great music DJs, the NFL and Howard Stern, and XM has some solid choices as well (Soul Street is excellent). This merger is a great idea, and I don't know why anyone would be against it (unless you work for terrestrial radio). Plus, it's cheaper! It's a no-brainer. FM is dead -- Long live satellite!

Posted by: Todd | July 26, 2007 1:11 PM

ok. Here is my .02. Even though the ala carte idea sounds like a GREAT idea, who's to say Mel K (CEO of Siruis who will become CEO of the new company) will not decide to cut some channels? They may have to "trim some fat". We know when it comes to mergers cuts are inevitable. I know I only listen to about 25 stations on XM, but if my favorite stations get cut in favor of a similar station on Sirius, then it will not be beneficial to me or any other consumer. We made choices on whether we wanted to buy Siruis or XM as our radio satelitte provider of choice. Will it be the same after a merger? Think about it.

Posted by: Will | August 9, 2007 12:53 PM

Also...my issue with it is... without competition whats to stop the prices from shooting up. Yeah they promise lower prices initally... but what comes later. Will the pricing model they are showing the FCC really be beneficial for the company 2-3-5 years down the line?!?!?! I don't think so, which will cause them to change and bite the consumer in the end.

Posted by: Will | August 9, 2007 1:16 PM

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