WASHINGTON (AP) - June 16, 2008 FCC Chairman Kevin Martin made his recommendation Sunday in
exchange for a number of concessions, including turning 24 channels
over to noncommercial and minority programming. That sets the stage
for a final vote that could occur any time after Martin's
recommendation is circulated among his fellow commissioners.
The provision on noncommercial and minority programming along
with several others - including a three-year price freeze for
customers - persuaded Martin to support Sirius Satellite Radio
Inc.'s buyout of rival XM Satellite Radio Holdings Inc. The deal
would affect millions of subscribers who pay to hear music, news,
sports and talk programming, largely free from advertising, in
homes and vehicles.
The other four commissioners have, for the most part, kept their
views on the deal to themselves. Unlike most FCC decisions, there
is no clear indication on how the vote will go.
The proposed merger has been in a holding pattern during an FCC
approval process that has gone on for more than a year.
Martin said the conditions will make the combination of the two
companies good for consumers.
"As I've indicated before, this is an unusual situation,"
Martin said in a statement. "I am recommending that with the
voluntary commitments they (the companies) have offered, on
balance, this transaction would be in the public interest."
The companies also agreed to an "open radio" standard, meant
to create competition among manufacturers of satellite radios,
according to FCC officials who spoke on condition of anonymity
because the agreement had not yet been made public.
Other conditions are similar to promises made by Sirius CEO Mel
Karmazin last year.
They include a three-year freeze on prices and packages that
include programs from both services, including a so-called "a la
carte" offering that would be available within three months of the
close of the deal.
The FCC's analysis has gone on twice as long as the agency
prefers in merger reviews, largely because the XM-Sirius deal faces
a special hurdle.
To ensure competition, the FCC prohibited the merger of the only
two license holders when it created the industry in 1997.
Martin is recommending approval despite intense opposition from
the land-based radio industry and most consumer groups, who say the
deal will create a monopoly.
The buyout was approved by the Justice Department in March.
The satellite radio deal has drawn an unusual amount of scrutiny
from Capitol Hill, where the National Association of Broadcasters
has fought an expensive advertising and lobbying campaign to block
approval.
The buyout received shareholder approval in November. The
companies said the merger will save hundreds of millions of dollars
in operating costs, savings that will ultimately benefit their
customers.
Karmazin has pledged that the combined company will offer
pricing plans ranging from $6.99 per month for 50 channels offered
by one service, up to $16.99 a month, where subscribers would keep
their existing service plus choose channels offered by the other
service.
Karmazin also said he will allow customers to choose and pay for
only the channels they want. The "a la carte" option will require
new radios, the companies have said.
In addition, the companies have pledged to offer radios that are
capable of receiving both services within one year.
An "interoperable radio" requirement was part of the two
providers' license agreement 11 years ago, but the companies have
never brought one to market, a point regularly brought up by merger
opponents.
The thorniest part of the negotiations was over how much radio
spectrum the companies would turn over to noncommercial and
minority broadcasters.
The companies agreed to turn over 8 percent of their satellite
capacity, which works out to 12 channels apiece for noncommercial
programmers and for those who have "not been traditionally
represented" in radio, according to Martin.
The details on how this system would work have yet to be worked
out, according to FCC officials.
Both companies have lost money each year since they launched
their satellites, but have not said the merger was necessary to
keep them afloat.
Washington-based XM has about 9 million subscribers while New
York City-based Sirius has about 8.3 million subscribers.
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On the Net:
Federal Communications Commission: http://www.fcc.gov/
XM Satellite Radio: http://www.xmradio.com/
Sirius Satellite Radio: http://www.sirius.com/
FCC chief gives OK to satellite merger
By 6abc
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