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The FCC under pressure from senator to nix or reexamine high-profile, controversial satellite radio merger

Sirius Satellite Radio and XM Satellite Radio were long-time rivals, and the top two players in the booming satellite radio market -- that is, until Sirius offered to buy XM.  The acquisition of XM by its competitor, for $13B USD marked a landmark acquisition when it was approved by the Justice Department, after review last month.

The deal is also controversial. The merger has been blasted by many in traditional-radio as anti-competitive, and essentially creating a monopoly in the satellite radio industry.  The Justice Department insisted that the move would not impact customers, and thus merited approval.  However, a small, but growing, number of politicians are voicing opposition to the deal.

Now these critics have a major political voice at last in the form of Sen. Byron Dorgan, D. ND, a senior senator on the Senate Commerce Committee.  Dorgan blasted the deal and the "illogical" approval, warning that it would lead to higher prices for consumers.  And Dorgan and his fellow critics still have a chance at fighting the deal.  The deal faces a final approval from the Federal Communications Commission, which many see as somewhat of a rubber stamp process.

Sen. Dorgan is urging the FCC to step back and consider the merger carefully.  In a letter to FCC Chairman, Kevin Martin, he writes, "This merger is contrary to the public interest. I hope that the FCC will stand up for competition in the public interest and deny this merger."

The merger would bring together high profile entertainers such as Oprah Winfrey and shock-jock Howard Stern.  The U.S. Justice Department insisted that despite claims to the contrary, the merger would not be anti-competitive.  It argued that traditional AM/FM radio, high definition radio, MP3 players, and mobile phone audio would deliver strong competition for airtime.

Analysts say that it is unlikely that the FCC will outright overturn the Justice Department's approval at this point.  One possibility is that they may impose additional restrictions on the deal to protect the consumer.  The FCC in this phase, under U.S. law is tasked at looking past competitive issues and determining whether the communications deal serves the overall public interest well.

Sirius Chief Executive Mel Karmazin has promised good behavior in the case of a merger.  He says that with the merged company customers could buy channels individually, as well as block adult channels in packages and get refunds for them.  Sirius also announced that post-merger all XM and Sirius radios will continue to work as normal.  Sirius and Karmazin have not yet fully commented on price ramifications, though.





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