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FCC Chief Favors Approval Of Satellite Radio Deal

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The Associated Press

Published: June 17, 2008

WASHINGTON - The proposed merger of the nation's two satellite radio broadcasters - bogged down in the regulatory process for more than a year - has cleared a major hurdle: The Federal Communications Commission chief is recommending approval of the $3.8 billion deal.
FCC Chairman Kevin Martin made his recommendation Sunday in exchange for a number of concessions, including turning 24 channels over to noncommercial and minority programming. That sets the stage for a final vote anytime after Martin's recommendation is circulated among his fellow commissioners.

The provision on noncommercial and minority programming, along with several others - including a three-year price freeze for customers - persuaded Martin to support Sirius Satellite Radio's buyout of rival XM Satellite Radio Holdings. The deal would affect millions of subscribers who pay to hear music, news, sports and talk programming, largely free from ads, in homes and vehicles.

The other four commissioners have kept their views on the deal largely to themselves. Unlike most FCC decisions, there is no clear indication how the vote will go.

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 had 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 lasted 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.

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