FCC's Martin To Support Sat Merger ... With Conditions
June 15, 2008 at 11:22 PM (PT)
The WASHINGTON POST is reporting in MONDAY's paper that FCC Chairman KEVIN MARTIN has decided to support the merger of XM SATELLITE RADIO and SIRIUS SATELLITE RADIO. The POST reports that the decision to recommend approval of the deal follows concessions aimed at stopping the combined company from raising prices.
In addition, the ASSOCIATED PRESS is separately reporting that MARTIN's decision was also based on a concession that will turn over 24 channels of the combined service to noncommercial and minority programming. Another concession will be a three-year price freeze for consumers. A vote on the merger by the Commission could come as early as this week.
This is an unusual situation ... with the voluntary commitments they have offered, on balance, this transaction would be in the public interest
In a statement, MARTIN said, "As I've indicated before, this is an unusual situation ... I am recommending that with the voluntary commitments they (the companies) have offered, on balance, this transaction would be in the public interest."
FCC sources also told the AP that the satcasters also agreed to an "open radio" standard, which will create competition among satellite radio manufacturers. Among the other conditions, agreed to by SIRIUS CEO MEL KARMAZIN last year, 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. At the time, he proposed pricing plans that ranged 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.
The biggest sticking point in the negotiations was over how much radio spectrum the satcasters would turn over to noncommercial and minority broadcasters. The final agreement was 8% 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. The details on this system have yet to be worked out.
The merger was previously approved by the DEPARTMENT OF JUSTICE, which determined that the plan would not violate anti-trust provisions. An FCC approval of the merger, which would require the Commission to waive explicit anti-merger prohibitions in the companies' licenses, may raise constitutional questions about the justification for caps on broadcast license ownership and cross-ownership if based on including satellite, MP3 players and iPODS, and mobile phones as competition for broadcast radio.