NAB to Karmazin: Tune out merger

Group's chief says Sirius CEO is misleading public

The head of the National Association of Broadcasters is urging Sirius Satellite Radio CEO Mel Karmazin to end his attempt to merge the nation's two satellite radio companies and accusing the executive of misleading the public about the deal's benefits.

In a letter to Karmazin on Thursday, NAB president and CEO David Rehr asked the radio titan to scrap the deal. Karmazin has told Congress and investors that merging Sirius and XM Satellite Radio will bring customers more programming choices without a huge increase in cost.

Rehr accused Karmazin of attempting to win the merger so he can cover up poor business choices like giving Howard Stern a multiyear deal worth hundreds of millions of dollars.

"We believe that the proposed merger is simply a request for a government bailout for operational and financial missteps that have depressed stock prices and in turn investors," Rehr wrote. "Any gains resulting from a merger of Sirius and XM will largely accrue to Wall Street and the companies' executives and not African-American, Latino or other programmers or consumers. Accordingly, we respectfully urge Sirius and XM to withdraw their application in the best interests of consumers and competition."

NAB spokesman Dennis Wharton said the letter was prompted by comments that Karmazin made during a Lehman Bros. conference on wireless investment. At that event, Karmazin called the broadcaster lobby "disgraceful" and accused the NAB of bankrolling various groups and studies that purport to show why the merger would be bad for Americans.

While Rehr admitted "to identifying antitrust experts who have examined the proposed merger and determined that it will harm consumers and competition, and compensating these individuals for publishing their conclusions," he called Karmazin's criticism "misguided." More than enough of the comments filed at the FCC support its view that the merger should be blocked, he said.

"Indeed, the FCC's formal merger record includes hundreds of letters from members of the public (including self-described satellite radio subscribers) who oppose the merger, all without prodding from the NAB," Rehr wrote.

While Rehr's letter repeated arguments broadcasters already have made opposing the deal, it's unusual for the head of a major trade organization to send a personal communication during a merger dispute.

"Mr. Rehr's actions speak more clearly than his words. Anyone so determined to stop the Sirius-XM merger must fear the competition that will result," Sirius spokeswoman Kelly Sullivan said. "We're thrilled to have the support of such a wide range of diverse groups, representing rural, African-American and Latin consumers. Given how traditional media has historically underserved these constituencies, it is disappointing but not surprising that NAB would try to be dismissive of the significance of their support."

The combined value of the company would be about $13 billion, which includes net debt of about $1.6 billion. The combined company would have about 14 million subscribers.

There was no comment from XM about Rehr's letter.