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  (Source: Bloomberg)
FCC changes its tune

As expected, the United States government approved a long-running proposal to merge competing satellite radio services XM and Sirius. The two companies combined will have a membership base of 18 million subscribers and the deal is valued at approximately $3.3 billion.

The approval process was held up by a deadlock among FCC top brass, where commissioners’ votes split along party lines except for that of republican Commissioner Deborah Taylor Tate. She announced her support in favor of the merger Thursday, with a final deal gaining approval Friday night.

In order to assuage fears of a monopoly, XM-Sirius will be held to a number of restrictions governing the way it operates. Subscription prices will be capped for three years after joining and the company is required to offer interoperable radios compatible with both XM and Sirius networks.

Other restrictions include a stipulation to dedicate 8 percent of its capacity -- approximately 24 channels -- to alternative and educational programming, designed to “enhance the diversity of programming available to consumers.” Within the next three months, consumers will also receive a “number of new programming packages,” including the ability to select stations on an a la carte basis, when combined with an appropriate receiver (also ordered to be available within three months).

In an unusual turn of events, the agreement (PDF) directs the merger all the way down to an exact price for subscription offerings. XM-Sirius’ price cap for basic programming is $12.95 a month, and a combined “best of” package will be available for $16.99. A “mostly music” package will be available for $9.99 per month, and a family-friendly programming package will be prices at $11.95 or $14.95 per month, depending on their provider.

“The applications of XM and Sirius satellite radio to merge did not present the Commission with an easy case,” said FCC Chairman Kevin J. Martin in a statement (PDF) released Monday. “I said at the time that the two companies announced their intent to merge that I thought they had a high hurdle to meet … It has taken some time, but I do believe that with the essential voluntary commitments they have made, the parties have met this burden.”

Dissenting Commissioner Michael J. Copps spoke out against the decision (PDF), accusing the FCC of “[stacking] up enough ‘conditions’ on the merged entity … to tip the scale in favor of approval.”

“After cutting through all the heat and noise and lobbying this proceeding has generated,” he said, “we are left with the unshakable reality of a merger-to-monopoly in a market that could sustain competition.”

Both XM and Sirius received their satellite radio licenses in 1997, on condition that they never merge. Despite that, the merger gained the Justice Department’s blessings in March, and FCC Chairman announced his support last June.



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why?
By acejj26 on 7/28/2008 11:02:14 PM , Rating: 2
Why does the government get to decide the pricing and packaging? How about letting the market decide?




RE: why?
By Crusty on 7/28/2008 11:20:18 PM , Rating: 2
It's called a monopoly. Even though radio isn't considered a public utility, since the govt. is allowing them to form a monopoly for satellite radio they need to regulate it.


RE: why?
By acejj26 on 7/29/2008 12:27:21 AM , Rating: 4
I don't understand it being a monopoly any more so than each city only has one cable provider. People can choose to get satellite or choose not to pony up for the service. Alternatives exist (FM, AM, ipod, CDs). Let the market dictate the success/failure of this joint operation, not the government.


RE: why?
By masher2 (blog) on 7/29/2008 12:53:06 AM , Rating: 3
Exactly. Saying XM/Sirius has a monopoly on satellite radio is like saying Honda has a monopoly on Civic sales.

The real market here is audio entertainment, of which terrestrial radio, satellite radio, mp3 players, and many others are all part of.


RE: why?
By Crusty on 7/29/2008 1:27:41 AM , Rating: 1
You should be saying "Honda has a monopoly on car sales." A Civic is just a different kind of car, kind of like a different channel on the radio. It's still a car, and it's still a method of transportation, and just like that here are many different providers of content for the radio. So sure, you could say XM/Sirius has a monopoly on any number of different channels(Howard Stern for example), just the same as you can say Honda has a monopoly on Civics, but what's the point? It makes no sense, and is totally invalid.

Further, satellite radio is nothing like terrestrial radio; it's not free . MP3 players come on? People don't listen to the radio to listen to all the songs they have in their own collection. Maybe if your MP3 player had a built in satellite tuner... oh wait none do. I will give you the fact that these are all alternatives for providing audio content, but the fact remains that there is only going to be one sole provider for satellite radio.


RE: why?
By gcarr4499gt on 7/29/2008 6:23:02 AM , Rating: 2
Your analogy is flawed. Honda having a monopoly on Civics is more like saying some company has a monopoly on a single FM radio station.

Satellite radio is a totally different technology than FM radio. It's more like Honda having a monopoly on electric cars.


RE: why?
By AlexWade on 7/29/2008 7:56:21 AM , Rating: 2
But XM/Sirius does not have a monopoly for listener's ears. With plenty of viable free alternatives, XM/Sirius has to keep costs reasonable or people will go to the free alternatives.


Lifetime Subscriptions
By jamesbond007 on 7/28/2008 11:47:46 PM , Rating: 2
Any notes on what will happen to users that have the SIRIUS lifetime subscriptions? Do they still get all the channels for one fee? No new ones? Basic package only?




RE: Lifetime Subscriptions
By TomCorelis on 7/29/2008 1:55:37 AM , Rating: 2
I pulled this from Wikipedia:
quote:
One concern voiced by some subscribers regards the Sirius lifetime subscription: for a one-time fee, Sirius subscribers were able to obtain a lifetime subscription for a receiver. This subscription is tied to the individual receiver, and there was a concern that the subscription may not transfer to a new universal receiver. However, Sirius' FAQ page regarding the merger states that "Any plan you sign up for now will be honored by the merged company." As they also have guaranteed that no radio will become obsolete, it is likely that this concern will be addressed via some new, merged signal.

http://en.wikipedia.org/wiki/XM/Sirius_merger

The link that passage points to, however, is dead.


RE: Lifetime Subscriptions
By tallcool1 on 7/29/2008 1:22:46 PM , Rating: 3
quote:
Any notes on what will happen to users that have the SIRIUS lifetime subscriptions? Do they still get all the channels for one fee? No new ones? Basic package only?
I called Sirius to try and get an answer to your question. The customer rep I spoke with had no details what so ever and could only direct me to the web site http://www.siriusmerger.com/

The site mentions:
quote:
We guarantee no radio will become obsolete. Your current radio will continue to provide you with the programming you enjoy, whether you keep your current service or change to a new subscription plan.
However my question for the rep was not that the radios would be obsolete, but how would this affect lifetime subscriber programming and she could not answer the question at this time.

Looking over this document:
http://www.siriusmerger.com/uploads/ala-cart-Press...
I beleive that Sirius Lifetime subscribers will fall under the "Sirius Everything" plan, which would mean that nothing will change for those subscribers.


As long
By Shawn on 7/28/2008 11:56:00 PM , Rating: 2
as I can use my XM equipment indefinitely I will be happy.




Because
By MrPerez on 7/28/08, Rating: 0
"I want people to see my movies in the best formats possible. For [Paramount] to deny people who have Blu-ray sucks!" -- Movie Director Michael Bay














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