FCC chief recommends OK of satellite radio merger

By John Dunbar, Associated Press Writer
June 16  

WASHINGTON (AP) -- The chairman of the Federal Communications Commission is recommending approval of the $5 billion merger between the nation's two satellite radio broadcasters in exchange for concessions that include turning over 24 channels to noncommercial and minority programming, The Associated Press has learned.

That condition -- along with others, including a three-year price freeze for consumers -- convinced FCC Chairman Kevin Martin on Sunday to recommend approval for Sirius Satellite Radio Inc.'s buyout of rival XM Satellite Radio Holdings Inc. The deal affects millions of subscribers who pay to hear music, news, sports and talk programming, largely free from advertising, in homes and vehicles.

Martin's recommendation sets the stage for a final vote on the closely watched merger, which could occur any time after his recommendation is circulated among his fellow commissioners.

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 has 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.

Oh this should be good.  Those "savings" the merger brings the mother corp. will benefit the customers one bit.  I only wonder how full the briefcase of cash to bribe the FCC was to make this happen.  There is no way this decision was made in the interest of the public.  

Quoted from Oh yeah

.....There is no way this decision was made in the interest of the public.  

Like two competitors battling each other over a smallish portion of the total radio pie, both losing millions for years without end, is good for anybody?

Quoted from mikedup

Like two competitors battling each other over a smallish portion of the total radio pie, both losing millions for years without end, is good for anybody?

Competition is always better than a monopoly.   They're being rewarded for having brutal business plans in place.  The next move will be once this hurdle clears is to do the same thing in Canada.  Think that's fair?  They're already getting away without compiance on our cancon rules, next they're going to get away with non-compliance on foreign ownership rules because we're spineless and won't say no.  The bigger aspect here is another Canadian company also was approved for a cross-country service but backed out when all three were given licenses.  Now it appears like once again the CRTC made a major f-up but won't be held accountable.  Kind of like most of their new radio apps they've approved.  The CRTC and the FCC both claim to be representing and policing the airwaves in the interest of the people, but at the end of the day they're really not representing much of anyone other than a few big corporations and their own jobs which I'm sure receive plenty of nice kickbacks.