FCC chairman's support for XM-Sirius deal "leaked"

While the FCC hasn't announced any decision, the Associated Press says that its chairman will recommend approval of the $5 billion merger between XM and Sirius. Kevin Martin does so, however, on the condition that the two satellite broadcasters freeze consumer prices for three years and turn over 24 channels (that's 8% of their combined satellite capacity) to "noncommercial and minority programming." The merged giant must also offer an "open radio standard" meant to create competition amongst radio manufacturers and an "a la carte" service that would allow customers to only pay for the channels they want as long as they purchase new radios. Speaking of those non-existent radios, the two claim that Interoperable radios capable of receiving both XM and Sirius broadcasts would be available "within one year." With DoJ Antitrust approval out of the way, all that's left now is to circulate Martin's recommendation for final vote from the FCC's four other commissioners -- a vote on a merger which, as strange as it seems, was expressly prohibited by the FCC when it licensed the satellite radio industry back in 1997.

[Thanks to everyone who sent this in]

[Christy McGrory @ Jun 16th 2008 6:17AM]

Woo I can finally get back on engadget. I'm not sure if it was my connection but I suspect it was thier servers because I got the message on other weblogs, Inc. sites aswell. anyway.

[jared @ Jun 16th 2008 6:19AM]

I think it is their site as well. Everything is running really really slowly.

[Christy McGrory @ Jun 16th 2008 6:18AM]

Woo I can finally get back on engadget. I'm not sure if it was my connection but I suspect it was thier servers because I got the message on other weblogs, Inc. sites aswell. anyway.

[PEZ @ Jun 16th 2008 6:59AM]

Have of this shit Sirius has already said they will do.

BUT - What sort of competition does a PAY service need to offer? That doesn't make any sense whatsoever.

Screw the FCC.

[LC @ Jun 16th 2008 7:34AM]

I believe the competition clause was for a hardware standard and not the service. Hey, if it means it will lower the price of higher featured hardware, I'm for it.

[LC @ Jun 16th 2008 7:35AM]

I believe the competition clause was for a hardware standard and not the service. Hey, if it means it will lower the price of higher featured hardware, I'm for it.

[GhostDoggy @ Jun 16th 2008 7:43AM]

Personally, I think this is a load of BS. The FCC denies two satellite video companies the ability to merge, yet they are willing to allow two satellite audio companies to merge?

Digitally, speaking, there is a lot more competition in the video arena than in the audio so who bought bought in the FCC?

[jubei @ Jun 16th 2008 8:08AM]

The two satellite TV companies were denied the merger because it would setup a monopoly in rural areas where satellite TV is the only means of getting something other than over the air coverage. Sirius and XM, even merged, have serious competition from multiple sources (ipods, FM radio, AM radio). This is not a monopoly imo.

[John Smith @ Jun 16th 2008 8:28AM]

"The two satellite TV companies were denied the merger because it would setup a monopoly in rural areas where satellite TV is the only means of getting something other than over the air coverage. Sirius and XM, even merged, have serious competition from multiple sources (ipods, FM radio, AM radio). This is not a monopoly imo."

Because we know that DVD's you buy, DVD's you rent, VCR's, over the air TV and movie theaters don't compete with TV at all, right? I see no difference between the two. If the satellite TV companies are a monopoly, so is XM-Sirius.

[nighthawk_cp @ Jun 16th 2008 8:41AM]

Living in a rural area and subscribing to both services, I think I can comment on that John Smith.

When Echostar and Direct tried to merge, the only competition they had in rural areas (like where I live) was each other. When I moved in the country I had no option except an antenna that would get ONE CBS affiliate. The nearest movie store was a 30+ mile drive, so renting movies was out of the question. And with some trees in my area blocking satellite signals from both satellite TV companies I was stuck with that one shitty CBS station. There was no other option for me. Eventually I signed up for NetFlix and have had it for years. I since moved to another house that has a clear line of sight and have DISH. But in very rural locations there is literally NO alternative to Dish/Direct.

In comparison on my commute to work, I have competition from multiple AM/FM stations, my iPod, my satellite radio, and more. I can even get online and stream Pandora through my aircard in my laptop. So thats 5 choices for just myself in a rural area. I think that should help you understand the difference John.

[Rocketboy @ Jun 16th 2008 2:18PM]

And it was the satellite tv companies fault that you moved to such a podunk area?

[St3phen @ Jun 16th 2008 9:28AM]

Hey, remember the last time you drove through an area that didn't quite have any radio programming that you wanted to hear? Were the radio programming choices in that area really competition for SDARS? Would you not have preferred to listen to your favorite SDARS channel? Maybe hear a new artist or comic that you liked (but don't have on your iPod)? Ever get tired of the stuff that's on your iPod?

While an iPod does give me the ability to hear all the music I've gone through the trouble of ripping from CD or purchasing online and then transferring to it (and, remember, some people may not be so savvy), it fails to expose me to new artists, comedians, or talk shows not available in the area through which I am traveling.

So, is there really anything out there like SDARS, which can give me consistent programming from coast to coast and expose me either to new stuff or stuff I've heard before but don't have on my iPod?

The answer is 'no' and if the merger goes through I will have 1/2 the choices I had before and, yet, will be subject to the pricing whims of the SDARS monopoly in the face of no competition.

[John Ward @ Jun 16th 2008 7:58PM]

Sorry, but offering a better product doesn't mean you have a monopoly. If it did Hunts would be in trouble since I can't stand the taste of Heinz ketchup. . .

[s @ Jun 16th 2008 10:07AM]

This industry might not even continue to exist without a merger, and i doubt that a united company would try to price-fix its way into profits when SIRI/XM are having enough trouble signing up subscribers as it is. Sorry, but you seem to be missing the forest for the trees.

[z0phi3l @ Jun 16th 2008 10:14AM]

@s

Thir money and subscriber problems will get much better once the FCC hurries up and approves the merger, many of us are waiting for it before spending money on a receiver for it

[St3phen @ Jun 16th 2008 10:57AM]

@s The thing about that is the market has built-in remedies for this. (Here's the simplified version:) If one of the SDARS licensees failed, then they would sell their license to a new purchaser, presumably at a price lower then the licensee's current market value and infrastructure. The purchaser would enter the market, therefore, at much lower price point with much lower costs of entry than the original licensee. As such, it would be easier for the purchaser to make a profit.

At this point, the SDARS license stays in use, the service continues uninterrupted, and a profit is made. Lather, rinse repeat.

The market was not given a chance to work the way it's supposed to, and legal actions such as this lead to violations of the Law of Unintended Consequences.

[St3phen @ Jun 16th 2008 10:58AM]

@John Ward it does when your business requires one of the 2 licenses required to operate. Last I checked, neither Heinz nor Hunts took up one of the two government-allowed licenses to make catsup.

[TopaZ @ Jun 16th 2008 12:14PM]

In a truly free market, there wouldn't even BE anti-trust laws, so this merger would have happened on the day the two companies decided to do it (1 1/2 years ago)

I also oppose the forceful addition of the 24 "public service" channels -- it's effectively cutting off 8% of their body because of Jesse Jackson's lobbying a few months ago.

I hope Mr. Jackson launches his own satellite, so the FCC can force him to set aside 8% of his channels for "XM/Sirius related programming." Surrre.

[FilmBuffRich @ Jun 16th 2008 2:53PM]

What qualifies as non-commercial and minority programming?

Sirius already carries NPR and the BBC and has channels predominantly aimed at African American and Latino audiences. Do these count?

[LC @ Jun 16th 2008 5:00PM]

I find the whole minority clause insulting. Is the FCC implying that minorities do not listen to current music and talk that is already on the air and only listen to ethnic progtamming?

[macdoc @ Jun 17th 2008 7:21AM]

I don't see why the FCC should even get a say in this. The DOJ has already approved it, that's should be all thats needed. The FCC should have nothing to say about a service I pay for.