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Hey Mel, Your (Pay-)Slip is Showing

Attorney General Alberto Gonzalez wasn't the only one getting raked over the coals before Congress last week. Sirius Satellite Radio CEO Mel Karmazin also faced a hostile audience in a hearing at the Senate Committee on Commerce, Science and Transportation on the proposed XM-Sirius merger, in which committee chairman Daniel K. Inouye of Hawaii said he believes the deal faces "a steep hill to climb" because of concerns over competition. This week, things look even bleaker for the marriage of the two outlets for new-form radio, which have both spent lavishly on programming and signing up subscribers.

First, there's a report out from Bank of America analyst Jonathan Jacoby saying that "stand-alone values and merger synergy values likely are lower than previously estimated" – in other words, the companies are worth less than thought whether they merge or not.

Second, there's a proxy filing out from Sirius yesterday that shows, in addition to a bonus of $3 million, $1.25 million in salary and $2.83 million in stock awards, Karmazin got $24.1 million in options awards (Sub. req.) in 2006. At a time when both options grants specifically and executive compensation in general is under intense scrutiny, Karmazin's $31.18 total pay package is not going to help the merger go through.

Finally, Bloomberg News has a feature today on the "rogue antennas" that XM put up to overcome coverage gaps, particularly in urban areas, calling them "a network of hundreds of antennas that were built and operated in violation of U.S. Federal Communications Commission rules."

(Just curious: is a "rogue antenna" one that takes in unauthorized signals, like pirated Rangers games, and broadcasts then to non-subscribers?)

All of this means that the XM-Sirius deal, which many observers consider vital to the survival of satellite radio, could be dead in the water. Personally, I'm with New Yorker financial columnist James Surowiecki, who wrote last month, " Consumers … have little to fear from a merged satellite company in the radio market, and they may actually have a lot to gain."

And isn't it a little late in the game for Congress to get on its hind legs and start barking about media consolidation?

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