WASHINGTON (AP) - July 24, 2008 Sirius Satellite Radio Inc.'s proposed $3.6 billion buyout of
rival XM Satellite Radio Holdings Inc. has been before the Federal
Communications Commission for 16 months.
The five-member commission is deadlocked at 2-2, but Republican
Deborah Taylor Tate was expected to cast the deciding vote
approving the deal once a consent decree outlining the enforcement
action is circulated for a vote.
"This was an issue that Commissioner Tate thought was important
for us to deal with prior to her supporting the merger," FCC
Chairman Kevin Martin said Thursday. "I think that this was a
significant issue that we can take off the table that I think will
allow us to move forward soon on finishing up the merger."
Tate had apparently sought a fine of $8 million, according to
FCC officials who asked not to be named because the deal was not
yet final.
Martin said the agency reached an agreement late Wednesday night
where XM will pay $17.5 million and Sirius will pay $2.2 million to
resolve interference complaints and violations related to
land-based signal repeaters operated by the companies.
Martin said XM's penalty was greater because the company's
offense was more egregious. He said that XM had operated more than
300 repeaters that were in violation of FCC rules.
"And even more significantly," Martin said, "XM had continued
to operate their repeaters without authority when they were in
violation."
The agency was free to pursue the enforcement action against the
companies outside of the merger process, but Tate apparently wanted
the matter settled before approval. Tate has not responded to
requests for comment.
The Justice Department approved the deal in March without
conditions, saying the companies don't really compete because
customers must buy equipment that is exclusive to either XM or
Sirius, and subscribers rarely switch providers.
DOJ also agreed with the companies' argument that they compete
with other forms of audio entertainment, including digital radio,
Internet-based radio stations and even devices like Apple Inc.'s
iPod.
FCC approval faced a steeper climb because the companies were
prohibited from combining under terms of their licenses. The agency
struggled to come up with a way to show that allowing a satellite
radio monopoly was in the public interest.
The companies voluntarily agreed to a set of conditions,
including a three-year price cap and an 8 percent set-aside of
"full-time audio channels" for public interest and minority
programming. They will also adopt an "open radio" standard that
may lead to a greater variety of features in radios and greater
competition among manufacturers.
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.
The vote on the buyout will apparently be split along party
lines. Democratic commissioners Michael Copps and Jonathan
Adelstein have both voted against the merger while Martin and
fellow Republican commissioner Robert McDowell have voted in favor.
Adelstein had sought further concessions from the company but
withdrew his offer on Wednesday after it failed to draw support.
The two companies have a combined subscriber base of more than
18 million, according to the most recent figures. XM is based in
Washington DC while Sirius is in New York City.
Under the buyout, XM shareholders will receive 4.6 shares of
Sirius stock for every share of XM stock. Shares of Sirius stock
fell 26 cents or nearly 10 percent Thursday, dropping the value of
the deal to $3.6 billion.
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On the Net:
Federal Communications Commission: http://www.fcc.gov
Sirius: www.sirius.com
XM: www.xmradio.com
