FCC Affirms Satcaster Merger As XM And Sirius Settle Enforcement Matters
July 24, 2008 at 3:25 PM (PT)
THE WALL STREET JOURNAL reaffirmed YESTERDAY's report that the FCC Commissioners have reached a tentative deal to approve the proposed merger of SIRIUS and XM Satellite Radio. Commissioner DEBORAH TAYLOR TATE is expected to cast the final and deciding vote on the deal shortly, the officials said, after details are resolved on several outstanding enforcement issues.
XM SATELLITE RADIO and SIRIUS SATELLITE RADIO confirmed that the companies are in discussions with the Enforcement Bureau of the FCC to settle outstanding enforcement matters.
As previously disclosed by the companies, in 2006, the FCC commenced investigations regarding the compliance of certain radios that include FM transmitters with the Commission's rules, and the compliance of certain terrestrial repeaters with the special temporary authority granted by the Commission. The companies hope to enter into a Consent Decree with the FCC terminating these inquiries.
As part of a possible Consent Decree, the companies expect to agree, among other things, to:
-- adopt comprehensive compliance plans, and take steps to address any potentially non-compliant radios remaining in the hands of consumers;
-- in the case of XM, within 60 days of the order adopting the Consent Decree, shut down 50 variant terrestrial repeaters, and shut down or bring into compliance an additional 50 variant terrestrial repeaters;
-- in the case of SIRIUS, bring into compliance or shut down up to 11 variant terrestrial repeaters within 60 days of the order adopting the Consent Decree. These terrestrial repeaters were shut off by SIRIUS in OCTOBER 2006; and
-- make a voluntary contributions to the United States Treasury of approximately $17 million in the case of XM, and approximately $2 million in the case of SIRIUS.
Other minor conditions are still to be resolved, but they won't significantly change the terms agreed to last month. One condition that will not be in the agreement, music to the consternation of terrestrial radio interests, is a requirement that the satcasters include technology that would enable their radios to receive HD signals from local radio stations.
There are no assurances regarding the ultimate outcome of these enforcement proceedings, including whether the FCC will approve Consent Decrees under discussion with the companies.
XM Senior Notes Offered
XM SATELLITE RADIO HOLDINGS INC. announced TODAY that its subsidiary, XM SATELLITE RADIO INC., priced an offering of $778.5 million of new senior notes. The notes, which were offered pursuant to Rule 144A and Regulation S under the Securities Act of 1933 (the "Securities Act"), will bear interest at an annual rate of 13%. The price to investors will be 89.93% of the principal amount of the notes for an effective yield of 16%. The company will receive gross proceeds of $700,105,050 from the sale of the notes before deducting the initial purchasers' discounts and commissions and estimated offering expenses. The new notes will be guaranteed by XM SATELLITE RADIO HOLDINGS INC. and certain subsidiaries.