Huffpost Media

Sirius-XM Merger Hangs In The Balance As FCC Split Down Party Lines

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WASHINGTON — The proposed merger of the Sirius and XM satellite radio companies appeared close to final approval Wednesday, with the sole undecided member of the Federal Communications Commission poised to support the deal if the companies settle past rules violations.

Commissioners are currently at a 2-2 tie over whether to approve the proposed takeover of XM Satellite Radio Holdings Inc. by Sirius Satellite Radio Inc.

The value of the pending deal soared to $3.9 billion as shares of Sirius rose Wednesday by nearly 13 percent. XM shareholders will receive 4.6 shares of Sirius stock for every share of XM stock.

The lone holdout, Commissioner Deborah Taylor Tate, has indicated she will vote in favor of the buyout if the companies agree to settle charges they have violated agency rules, in addition to other lesser promises, according to an official familiar with the negotiations who asked not to be named because the final vote has not been made public.

Tate, FCC Chairman Kevin Martin and representatives of both satellite radio companies did not respond to a request for comment late Wednesday.

Also on Wednesday Democratic commissioner Jonathan Adelstein, who sought further concessions in the pending satellite radio buyout, withdrew his offer after it failed to draw support.

Adelstein joined Democratic colleague Michael Copps in dissent. Martin has recommended approval as has fellow Republican Robert McDowell.

Adelstein released a statement Wednesday saying he had hoped to "forge a bipartisan solution" that would help consumers, but that it instead appeared that consumers would "get a monopoly with window dressing."

Last week Adelstein said he would cast a third and clinching vote approving the buyout if the companies agreed to cap prices for six years and make one-quarter of their satellite capacity available for public interest programming, among other conditions.

His proposal sought stronger concessions than the companies offered voluntarily one month ago. That offer led to Martin's recommendation that the deal be approved.

The companies announced their intention to combine in February of last year. The Justice Department cleared the combination this past March.

Lawyers from both companies have met several times in the past two weeks with Tate and agency enforcement officials, according to FCC documents. The discussions appear to have involved the use of ground-based signal repeaters, used by the companies to ensure adequate coverage in all parts of the country.

In one document, XM stated that it had been operating some of its repeaters in violation of FCC rules.

Late Wednesday, the status of the enforcement action was unknown, but published reports indicate the companies were expected to enter into a consent decree and pay the FCC $20 million.

The companies have agreed to submit to a number of conditions, including a three-year price cap, setting aside 8 percent of "full-time audio channels" for public interest and minority programming and adoption of an "open radio" standard that was less specific than what Adelstein was proposing.

Adelstein also wanted to set up an enforcement regime to make sure the companies adhere to the conditions, something that was not outlined in the previous voluntary offer.

Sirius and XM also have promised to include a limited "a la carte" offering that would be available within three months of the close of the deal and allow listeners to pay only for the channels they want to receive.

In addition, they have pledged to allow any manufacturer to develop equipment that can deliver satellite radio service and offer radios that are capable of receiving both XM and Sirius service within one year.

The National Association of Broadcasters, which has lobbied furiously to block the deal, released a statement Wednesday thanking the two Democrats, consumer groups, members of Congress and others who opposed what the organization called a "wrongheaded monopoly."

"Given such overwhelming opposition, we're not convinced the final chapter of this book has been written," NAB Executive Vice President Dennis Wharton said.

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On the Net:

Federal Communications Commission: http://www.fcc.gov

Sirius: http://www.sirius.com

XM: http://www.xmradio.com