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

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."

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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

Comments

[isisthecat]

Wonder if they'll add MSNBC. Neither XM nor Sirius have MSNBC now, but there's more than one FOX station, more than one CNN, several right-wing talk stations, one left-wing station.

[JJeff88]

The key criteria in determining the outcome of anti-trust legislation is: "Would the merger significantly reduce competition by limiting consumer choice?

This merger is a bit different because, instead of reducing the number of listening options available to each subscriber, it would actually increase the number.

For example - Suppose I live in NYC but root for the Chicago Cubs (baseball) and Chicago Bears (football) teams. XM carries major league baseball radiocasts exclusively. SIRIUS carries NFL football radiocasts exclusively. If I want to listen to both, I'm out of luck - unless I buy two separate receivers and subscribe to both services.

But subscribing to a combined XM/SIRIUS service would allow me to listen to Cub and Bear games on the same piece of equipment under one subscription.

Bottom Line - This expands rather than reduces my listening options.

And because there is competition in the form of broadcast radio. upcoming digital radio and the Internet, competition will not be "significantly reduced" via the proposed merger.

[gttim]

These companies are not making money because of bad management. They have overpaid for programming. The only way a merger should be allowed is if one of the 2 satellite licenses held by XM and Sirius is put back up for bid to the public, with the new merged company not being allowed to hold both, ever. Allow for new competition if these two want to merge. Do not let one company hold both of the only two public licenses that allows satellite radio service.

[highburygoon]

I could understand the resistance if satellite radio were the only form of radio communication available to the public. However, the simple fact is that it's not. There are other, FREE, options out there all over the AM and FM frequencies. When mergers involving companies that provide essential commodities, such as oil, gas, electricity etc, seem to glide through the approval process, and this proposed merger takes nearly two years, the only conclusion one can draw is that there's something underhanded going on.

[LeaveArtieAlone]

Thank you! I said almost the same thing some weeks ago!

[geobushono]

This is a gift to the corporatio­ns........­....Sirius paid howard stern $500 MILLION-and dropped CSPAN.
To me that sums it up.
I think Howard is fine, There was a time in my life I probably would have listened to him regularly.­..........­..I just happen to enjoy CSPAN.

About the minority programming, THE POWER-XM 169, has been turned into the Al Sharpton Channel.
About a year ago, XM gave Al a daily show which gets repeated....The price to the listeners is that they cancelled some really excellent , insightful­,progressi­ve, articulate­,POLITICAL hosts.
Minority programming at XM, isn't what it used to be.

[Kire]

Actually, C-Span dropped Sirius. They didn't want to be pre-empted by football games.

[CountryBeforeParty]

There is plenty of mi no ri ty programming on Sirius. What else can we expect to hear as a result?

[CountryBeforeParty]

There is plenty of minority programming on Sirius as it is. What else can we expect to hear?

[RadicalRuss]

A private service? You mean all those rocket launches for putting satellites into space was completely done with private rockets and mission control, paid for exclusively by the private money of Sirius and XM? And those shuttle missions for satellite repair, those were private shuttles and astronauts, right? And the airwaves over which their electromagnetic frequencies travel, those are private airwaves, I assume?

No satellite radio, or for that matter, any TV, cable, or radio, would exist without some serious feeding at the public trough by these major media conglomerates.

Do you realize how completely dominated by white males our communications media have become? Opening up programming time for public interest and minority programming is the least they can do. It's not as if anyone snubbed by satellite radio can just go out and build their own satellite radio network. So if we are going to go from a duopoly to a monopoly over satellite broadcasting, we should protect the public interest and foster more voices.

I even say this as a white male with a show on XM satellite radio (http://radicalruss.com) that could possibly be cut in favor of a public interest or minority show.

[CDRUSNret]

You need to get up to date on the commercial satellite and launch business. The majority of commercial satellite launches aren't done by the U.S. anymore. Sirius was launched by the Russians on a Proton LV and XM went on a Russian Sea Launched Zenit. The Russians, Chinese, and French dominate the commercial launch sector. As far as U.S. military launches.....who do you think builds the LVs? Boeing and for a long time Lockheed Martin and other iterations of the companies, such as the former General Dynamics built the LVs. They just slap "USAF" on the side, but the overwhelming majority of personnel participating in the launch are contractor personnel from the LV and spacecraft provider. As for the shuttle repair missions....If a shuttle retreived and/or repaired a commercial SV, NASA (actually the US Gov) was compensated. The overwhelming majority or shuttle repair was for military and USG civil missions. The shuttle can't repair a commercial COMSAT at geosynchronous orbit....it can't go to that altitude. As for the frequencies....read up on spectrum sales/licensing, and the WARC to learn how it's done.

[Busterdawg]

Do you know how much of the satellite radio spectrum should be allocated for public interest and minority programming?

0% ... because it's a private service! I'm a liberal and I am for free speech. But enough is enough... Jesse Jackson and his ilk need to stop looking for handouts from the private sector.

The FCC should actually have no jurisdiction over this. Next thing you know they will be dividing up HBO and Showtime to satisfy some phony minority outcry.

[KISSman]

Actually, the FCC could just say "no" and then bye bye merger and probably satellite radio soon after. So yeah, they can have some jurisdiction since it's basically going to be a monopoly and one that can only exist if the FCC says it can.

And why would you care? If you aren't going to listen to the minority programming then why bellyache about it? Let's all cry for the multi-billion dollar satalline radio companies being bullied around by the FCC.

I was initially against this merger, but paying $13 a month is getting old. I'm all for the $7 a month a la carte option considering that I don't listen to 2/3's of the channels on there.

[Kire]

why would you care? because that's a lot of money that could be going towards something that actually makes money, thereby keeping the company from going bankrupt

and it's more like a negative multi-billion dollar satellite radio company, they've been in debt for quit a long time