The FCC is set to
approve a proposed merger between XM Satellite Radio and Sirius Satellite
Radio shortly, with the final tie-breaking vote to be cast in the merger’s
favor.
That final vote belongs to Republican FCC Commissioner Deborah Taylor Tate,
who according to reports waited for a variety of “outstanding enforcement
issues” to be resolved before announcing support. Most of her qualms revolved
around outstanding enforcement issues – in one case, the FCC previously found
land-based radio repeaters transmitting signals beyond FCC limits. Attempts to
resolve the issue, in some cases, created cross-talk with traditional
terrestrial radio. A joint agreement will see the two companies settling with
the FCC for just under $20 million, with XM paying the lion’s share of fines –
about $17.5 million – while Sirius chips in a more modest $2 million.
Tate’s vote broke a 2-2 deadlock among the FCC’s top brass, with votes
splitting down party lines.
In casting his vote against the merger Wednesday, Democratic Commissioner
Jonathan Adelstein called the merger a “monopoly with window dressing.”
The FCC “missed a great opportunity to reach a bipartisan agreement that
would have benefited the American people,” he said.
The Wall Street Journal reports that both
companies combined are worth about $7.5 billion.
Under the proposed terms, both XM and Sirius will agree to a variety of
terms designed to quell fears of a monopoly. Both companies will commit to a
three-year price freeze for existing customers, as well as interoperability
initiatives that will give third parties the documentation needed to build
compatible satellite radios.
More notably, both companies agreed last June to set aside a portion of
their programming capacity – about 8%, or 24 channels – for use by educational
and minority broadcasters. A Wall
Street Journal dossier on Commissioner Tate
implies that this deal is likely her doing.
The merger is timed to allow the combined companies to make a big marketing
push in time for the 2008 holiday shopping season. Consumers will be able to
mix and match service between both companies’ selections within three months,
and they will have a number of new à la carte stations to choose from as well.
With the stances of everyone in the FCC’s commission settled, an actual vote
is expected cast by the FCC’s August 1 meeting.
Review over a proposed merger has been in the works for the past 13 months,
with analysts initially catching wind of an agreement in January 2007. At that
time, it was widely expected that the FCC would turn
down such a deal, due to concerns that the two companies –the only real
players in the American satellite radio market – would merge to form a
monopoly.
Time has been kind to the prospect, however, and in March the U.S.
Department of Justice gave
the deal its blessings. FCC Chairman Kevin Martin announced
his support in June.