APPENDIX

MATERIAL SUBMITTED FOR THE HEARING RECORD

RESPONSE TO POST-HEARING QUESTIONS SUBMITTED BY THE HONORABLE JOHN CONYERS, JR. TO MEL KARMAZIN, CEO, SIRIUS SATELLITE RADIO

Question:

Much of the criticism of this merger proposal has focused on its monopoly character. However, there is also the monopsony issue-the reduction from two to one in the number of buyers of content, including college sports rights, for satellite radio distribution. Today college conferences and other content providers can entertain offers from two different satellite radio distributors. Competition for content between these two companies has been fierce. If the proposed merger is allowed, all of that competition will disappear and there will be only one buyer of satellite radio content. Why should we allow that?

Answer:

It is highly inaccurate to describe this merger as creating a monopsony on the content side. There currently exist many distributors of content, and these distributors can reach listeners through a variety of platforms including terrestrial radio, wireless networks, podcasts, and the Internet. A programmer's options for content distribution are not currently limited to satellite radio, nor will they be so limited after the merger. Moreover, given satellite radio's continued desire to attract subscribers from other media, its incentive to continue to offer a broad range of content that customers desire will remain strong, and its ability to expand that range of programming will grow over time. In short, this merger does not harm competition at the programming level.

The specific example of college sports demonstrates that content providers do not rely on the two satellite operators to distribute their service. Like professional sports programming, college sports content is distributed successfully on a global basis via the Internet, in addition to traditional radio and television distribution. Using the Internet, a university, a conference, or an entire league, can distribute its content through a variety of partners or by itself. For example, Yahoo Sports distributes the audio broadcasts for over forty Division I schools across all sports, including teams from every Division I-A conference.1 CSTV.com offers audio and video for over 100 top schools, including UNC, Notre Dame, and UCLA across 30 sports.2 Universities can also offer their content through their own websites. Many individual schools offer their audio broadcasts through their Internet sites, so that alumni who are geographically dispersed across the world can access content. For example, Michigan offers free game audio through its website.3 Even schools with smaller sports programs such as Cornell and Harvard offer their alumni access to game audio across a greater variety of sports than is possible over satellite radio.1 These are just a few examples and such offerings of content on university websites is becoming the rule rather than the exception.

Because satellite radio is competing against other platforms like terrestrial radio and the Internet, it will continue to have the incentives to gather the programming that current and potential subscribers want, so programmers with compelling content will continue to have access to satellite radio post-merger. Indeed, in the longterm, by enabling the consolidation of duplicative channels and freeing up capacity

3 http://www.mgoblue.com/section-display.cfm?section_id=185&top=2&level=2.

4 http://cornellbigred.cstv.com/ and https://www.nmnathletics.com/SportSelect.dbml?DB—

OEM-ID=9000&KEY=&SPID=3659&SPSID=41065

for new channels, this merger increases the ability of programmers to reach customers via satellite radio.

If content owners have sufficient options to distribute their content, which they do, the focus of the antitrust inquiry should be on the impact on subscribers. For subscribers, there will be an immediate benefit as the most popular content can be shared on both the XM and Sirius platforms. Greater access to programming is a cognizable antitrust benefit.

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