June 16, 2008
F.C.C. Chief Recommends Approval of Radio Merger
By THE ASSOCIATED PRESS
Filed at 12:38 a.m. ET
WA****NGTON (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, s****ts 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.
Wa****ngton-based XM has about 9 million subscribers while New York
City-based Sirius has about 8.3 million subscribers.
|
