FCC Close To Backing XM-Sirius Merger

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By Cecilia Kang
Washington Post Staff Writer
Thursday, July 24, 2008

A merger of the nation's two satellite radio operators moved closer to conclusion yesterday with the deciding vote said to be leaning toward the deal, according to sources with knowledge of the negotiations.

Federal Communications Commissioner Deborah Taylor Tate was said to be ready to cast her vote in support of the union between XM Satellite Radio and Sirius Satellite Radio, with some conditions, according to officials at the agency who spoke on the condition of anonymity because the deal is pending.

Tate, a Republican, would be the deciding vote on the merger. The five-member Federal Communications Commission was split along party lines after Democrat Jonathan Adelstein earlier in the day voted to reject the deal.

Tate's office didn't respond to a request for comment.

The sources said Tate was pushing for the agency to impose a fine on Sirius and XM for not fulfilling an obligation that came with their licenses in 1997, offering interoperable technology to their users. She had also proposed several minor conditions, including price caps, more minority programming and a la carte channel offering that FCC Chairman Kevin J. Martin had also proposed, they said.

If Tate approves the deal, listeners of paid satellite radio will get their Oprah, NASCAR and Howard Stern fix from one operator going forward. The merger passed antitrust scrutiny by the Department of Justice and has been reviewed for more than 16 months by the FCC as the broadcasting industry and dozens of lawmakers and states attorneys generalhave opposed it.

Adelstein had said he would only support the merger if the two companies agreed to some concessions. Once it became clear that they would not, he withdrew his demands and voted against the union.

"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. "Instead, it appears they're going to get a monopoly with window dressing."

Subscribers and consumer groups have expressed concern that the combination of District-based XM and New York-based Sirius could lead to higher prices and fewer choices.

Larry Greer of Oakton listens every morning and afternoon to light rock and new age music through the XM radio receiver he installed in his Buick Lacrosse in 2005. He liked the service enough to extend it for $9.99 a month until 2012. He has several questions about the proposed merger, such as whether the FCC will strongly enforce promises of interoperable technology between XM and Sirius channels and price caps.

Greer said he's felt burned by promises not kept by the FCC and Congress with cable deregulation and sees the lack of enforcement over interoperable technology between XM and Sirius as a bad omen.

"By golly your job is to hold their feet to the fire. What have they been doing?" Greer said.

Chris Murray, senior counsel for Consumers Union, which opposed the merger, said the FCC didn't appear to be focused on consumer needs.

"Instead the question being asked is what will a majority of the FCC vote for," Murray said. "And the FCC seems to be willing to approve a merger to monopoly . . . once again demonstrating that the lobbying dollar goes a long way in Washington."

Martin and Robert McDowell, another Republican commissioner, both voted for the merger. Democrat Michael Copps joined Adelstein in opposing it.


© 2008 The Washington Post Company

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