WASHINGTON – A tentative deal has been struck by a majority of commissioners at the Federal Communications Commission to approve the merger of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., according to the Wall Street Journal.
Citing unnamed sources, the Journal reported Wednesday afternoon that Republican commissioner Deborah Taylor Tate was expected to vote in favour of the deal in exchange for a consent decree that resolves enforcement issues against the satellite companies that will cost them $20 million.
Tate is the only FCC member left to vote on the deal and she is expected to do so “shortly,” say two FCC officials close to the negotiations. She is expected to sign off on the deal in exchange for a consent decree that resolves several enforcement issues involving the satellite radio companies and a combined fine of about $20 million, an FCC source close to the deal said.
Tate has also asked for a variety of other minor conditions but exact details about the deal are not known since FCC officials and lawyers for the companies appear to still be working them out.
Tate’s vote would finally end the agency’s 13-month review of the deal that would combine the two radio services and create a single satellite radio network in the U.S. The merger would bring both companies a total of more than 17.3 million subscribers based on current subscriber numbers as of 2008. Her vote is critical for the deal’s approval since the rest of the five-member board remained evenly split on the deal.
The proposed merger is controversial because in 1997, the FCC only granted two licenses and, in order to ensure a state of competition, stipulated that one of the holders would ‘not be permitted to acquire control of the other.
As of Wednesday morning, both of the FCC’s two Democratic commissioners had voted against the deal. Democrat Jonathan Adelstein announced his decision in a statement, noting he was hoping for a "bipartisan solution" but that the other commissioners weren’t interested.
“I was hoping to forge a bipartisan solution that would offer consumers more diversity in programming, better price protection, greater choices among innovative devices and real competition with digital radio,” Adelstein said in a statement. “Instead it appears they’re going to get a monopoly with window dressing.”
XM and Sirius both contend that the company would not be a monopoly, as satellite radio is only part of the larger audio entertainment industry, which encompasses traditional terrestrial radio, HD Radio, digital media players such as Apple’s iPod and iPhone, and on-line radio.
Adelstein proposed conditions including a six-year price cap, a 25% channel set-aside for non-commercial and minority-owned stations and interoperable radios that would receive high-definition signals from terrestrial radio stations.
Tate has now become the center of negotiations, as the companies struggle to resolve several outstanding enforcement issues that have been raised. They include issues involving complaints that some of the satellite radio receivers exceeded FCC power limits and bled into the signals of some local radio stations.
Concerns have also been raised that Sirius has yet to bring to market an interoperable radio despite an FCC requirement that it develop one. Broadcasters have also complained that satellite booster towers were placed in non-approved locations.
In Canada, Sirius Canada and XM Canada are partially owned by their American counterparts in joint ventures with Canadian companies. The two Canadian ventures have not yet agreed to a merger. Complicating matters is that Sirius Canada has nearly 80% of the total satellite radio subscribers in Canada, and would likely demand a bigger piece of a merged company.
