by: Tom Corelis
Wild-card vote will likely allow satellite deal to go through
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.
