Oral Testimony of Peter Smyth Before U.S. House Telecom Subcommittee

WASHINGTON, DC - NAB Radio Board Member Peter H. Smyth, president and CEO of Greater Media Inc., testified today on behalf of NAB in opposition to the proposed XM/Sirius merger during a hearing before the House of Representatives Subcommittee on Telecommunications and the Internet. The following is a transcript of his oral testimony.

Good afternoon Chairman Markey, Ranking Member Upton and Subcommittee Members. My name is Peter Smyth. I am the President and CEO of Greater Media, Inc., which owns and operates 20 local AM and FM radio stations in Boston, Detroit, Philadelphia and New Jersey, and 13 community newspapers in Central New Jersey. I am testifying today on behalf of Greater Media and the National Association of Broadcasters.

I am here to voice NAB's opposition to the proposed merger of this country's only two satellite radio companies, XM and Sirius. But I first want to make several important points about the future of local radio.

As the CEO of Greater Media, a company that just celebrated its 50th anniversary in radio, I'm optimistic about our future. I've learned from working for a family-owned company that radio licenses are not a right, but a great privilege and we need to treat them accordingly, respecting listeners and delivering quality content to serve their needs.

As part of this obligation, we are transitioning to digital technology - HD Radio -- to provide the quality sound and additional data that digital services offer. We are also focusing on providing compelling LOCAL content that creates an emotional bond between listeners and their communities.

My colleagues understand that localism is our franchise, and ours alone, and that we must retain that unique connection to listeners that no other medium provides.

Which brings me to satellite radio, and the proposed XM/Sirius merger. As I see it, there are multiple reasons for government to reject this monopoly.

FIRST: Satellite radio is a national radio service that provides very similar programming to each listener across the country. There are only two such services, and they compete ferociously against each other in the marketplace. The undeniable fact is that Mr. Parsons and Mr. Karmazin want government permission to take two highly competitive companies and turn them into one.

SECOND: XM and Sirius are two companies with a track record of misrepresenting their intentions, not following the rules that have been established, and failing to correct their past transgressions.

For example, XM and Sirius for years have operated terrestrial repeaters in blatant violation of FCC rules. XM operated more than 142 repeaters at unauthorized locations. Not to be outdone, Sirius constructed at least 11 repeaters at locations different from what they told the FCC, including one in Michigan built 67 miles from its authorized location.

Morever, both XM and Sirius promised the FCC nearly a decade ago to have an interoperable receiver, yet no such device exists in the market today.

And now, many local radio listeners have complained to the FCC that explicit, X-rated programming from satellite radio "bleeds through" to their local stations without warning.
Viewed against this pattern of behavior, why would government trust these two companies as a monopoly?

THIRD: If this government-sanctioned monopoly is approved, consumers will be the losers. Subscription prices will rise, because there will be no competition to restrain monopoly rates. Jobs will be eliminated. Innovation will suffer. Neither listeners nor advertisers will benefit. Put simply - private corporate interests will benefit, but the public will suffer.

FOURTH: XM and Sirius, by their own admission, are not failing companies. Their current highly leveraged position is due to extraordinary fees paid for marketing and on-air talent, including the $83 million in stock that Sirius awarded to Howard Stern last month, on top of his initial bonus of $220 million. But even with these costs, XM and Sirius have made clear they can succeed without a merger.

Let's remember that when the FCC allocated spectrum to Sirius and XM in 1997, it specifically ruled against a single monopoly provider.

I've heard these companies claim that this monopoly should be granted because local radio competes against XM and Sirius. Let's be clear: My local radio stations do not compete against satellite radio in their national market. Local broadcasters' signals are not nationwide, and are not subscription. We are not a substitute for satellite radio service. XM and Sirius compete with each other - and no one else - in the national satellite radio market.

Five years ago, the only two nationwide TV satellite licensees - Echo Star and DirecTV -- tried to blaze a remarkably similar trail when they proposed to merge. They failed. Indeed, the FCC decided unanimously that the merger was not in the public interest.

For these reasons and others, I respectfully ask that this government-sanctioned monopoly be rejected.

Thank you, and I look forward to any questions you may have.

About NAB
The National Association of Broadcasters is a trade association that advocates on behalf of more than 8,300 free, local radio and television stations and also broadcast networks before Congress, the Federal Communications Commission and the Courts. Information about NAB can be found at www.nab.org.