Deciding vote in XM-Sirius deal makes offer

WASHINGTON (AP) - July 17, 2008 So far, two of the five members of the Federal Communications Commission have voted to approve Sirius Satellite Radio Inc.'s buyout of rival XM Satellite Radio Holdings Inc. That is one vote shy of a majority.

FCC commissioner Jonathan Adelstein, a Democrat, wants the companies to cap prices for six years and make one-quarter of their satellite capacity available for public interest and minority programming, among other conditions.

If the executives agree, Adelstein told the AP that he will be in favor of the deal.

Adelstein circulated his recommended conditions among the other four commissioners Thursday. His proposal seeks more concessions than the companies offered voluntarily one month ago. That offer led to FCC Chairman Kevin Martin's recommendation that the deal be approved.

Robert McDowell, a Republican, has since joined Martin in recommending approval. Deborah Taylor Tate, also a Republican, is undecided and had been considered the possible swing vote.

Adelstein has been a vocal opponent of big media mergers, so his offer is somewhat surprising. But with strong odds that Tate would eventually vote yes, his move would make the deal more palatable for critics.

"It's critical that if we're going to allow a monopoly, that we put in adequate consumer protections and make sure they're enforced," Adelstein said.

The two companies first announced their intent to merge last year. The Justice Department cleared the combination in March. Martin made his recommendation for approval last month. Since then, the agency has been subjected to intense pressure from those with a stake in the high-profile deal.

The companies have faced a tough challenge in gaining approval because the FCC, in creating the satellite radio industry in 1997, prohibited the only two licensees from merging. In an effort to prove the combination is in the public interest, lawyers for the companies volunteered to submit to a number of conditions, including a three-year price cap, a time frame Adelstein would like to see doubled.

They also agreed to turn over 24 channels to noncommercial and minority programming.

Adelstein is seeking 25 percent of the companies' satellite capacity for public interest programming - 10 percent for non-commercial programming and 15 percent for minority programming.

The companies also offered to adopt an "open radio" standard, meant to create competition among manufacturers of satellite radios. The condition was met with skepticism because the companies subsidize the price of radios, making it unlikely competitors would get into the business.

Adelstein is proposing that the companies be required to include a digital radio tuner in any radios they subsidize that also include regular, non-digital AM-FM service.

Digital radio is a small but growing market that is expected to become more popular in years to come.

Adelstein also wants 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 an "a la carte" offering that would be available within three months of the close of the deal. In addition, they have pledged to offer radios that are capable of receiving both XM and Sirius service within one year.