Sirius, XM Satellite Radio Merger Finalized

Federal regulators formally approved the merger of Sirius Satellite Radio and XM Satellite Radio. The FCC voted 3-2 to approve the buyout, with the tiebreaker coming Friday night from Republican commissioner Deborah Taylor Tate.

Tate had insisted that the companies settle charges that they violated FCC rules before she would approve the deal. The companies agreed this week to pay $19.7 million to the U.S. Treasury for violations related to radio receivers and ground-based signal repeaters.

Subscribers will not have to buy new radios to receive a mix of programming from both services, according to the companies. But if they want to pursue a special pay-per-channel a la carte option, they will need new sets.

The approval is considered a major setback for the terrestrial radio industry, which lobbied hard against the buyout. It was also opposed by consumer groups, various members of Congress and state attorneys general, all of whom argued a satellite radio merger would hurt consumers and was not in the public interest.

Adelstein voted against the buyout as did fellow Democrat Michael Copps. Joining Martin and Tate in approving the deal was Republican commissioner Robert McDowell.

The companies said the combination would create hundreds of millions of dollars in cost savings and lead to greater choice in programming for subscribers and flexible pricing options.

Tate released a statement Friday night praising the commission’s decision to punish the companies for rules violations before acting on the merger and supporting pro-consumer conditions imposed on the deal.

Under the terms of the consent decree, XM will pay $17.5 million and Sirius will pay $2.2 million to resolve interference complaints and violations related to land-based signal repeaters the companies operate to deliver programming.

The final merger agreement did not require the combined company to include a chip in its radios that will allow customers to receive digital signals from land-based radio stations, which would have helped the land-based radio industry.

The companies first requested permission to merge in March 2007. The Justice Department approved the deal in March of this year without conditions, saying the companies don’t really compete because customers must buy equipment that is exclusive to either XM or Sirius, and subscribers rarely switch providers.

The companies voluntarily agreed to a set of conditions, including a three-year price cap and an 8 percent set-aside of “full-time audio channels” for public interest and minority programming. They will also adopt an “open radio” standard that may lead to a greater variety of features in radios and greater competition among manufacturers.

Author: FutureMusic

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