[opendtv] News: FCC: XM-Sirius Merger, With Conditions, Will Benefit Consumers

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Tue, 29 Jul 2008 08:29:12 -0400


FCC: XM-Sirius Merger, With Conditions, Will Benefit Consumers

WASHINGTON -- July 28, 2008: The official release is out from the FCC on Friday's approval of the merger of XM Satellite Radio and Sirius Satellite Radio, with the commission saying it found that "grant of the application, with the voluntary commitments made by the applicants and other conditions, is in the public interest."

The commission said it looked at the merger application under the "worst-case" assumption that the relevant market is limited to satellite radio, and with that in mind, it concluded that the merger without the commitments and conditions would have potential harms to consumers, but, "with those commitments and conditions to mitigate the harms, however, the commission found the transaction to be in the public interest."

Conditions & Commitments

The FCC has accepted XM's and Sirius' commitment to a three-year price cap after the merger closes, "subject to certain cost pass-throughs after one year." That means they must keep their current $12.95 monthly rate and the prices for the required a la carte packages for three years, aside from a one-time pass-through, on the merger's first anniversary, of royalty costs incurred since their merger application was filed.

The new XM-Sirius must also offer new programming packages, including a la carte packages and receivers that can support them, within three months of the deal's closing. A "best of both" package must be made available at $16.99 a month, as well as talk-focused and music-focused program packages at $9.99, $11.95 family-friendly packages from each satcaster's lineup separately, and a $14.99 combined family-friendly package.

Six months before the caps run out, the FCC will seek public comment on whether the price cap should be extended, removed, or modified. The merger approval was conditioned, the FCC said, on the commission's being able to modify or extend the price cap.

Interoperable receivers must be in stores within nine months of the merger's close, and XM and Sirius have also committed to the "open access" provision requested by various public interest groups and lawmakers. The FCC said the combined company will "refrain from entering into any agreement that would grant an equipment manufacturer an exclusive right to manufacture, market, and sell [satellite radio] receivers." XM and Sirius have also agreed not to bar manufacturers from including any non-interfering HD Radio technology, iPod compatibility, or other audio technology, and they'll make the intellectual property available "on commercially reasonable terms" for any manufacturer to build a satellite receiver.

Within four months of the merger's close, the combined XM-Sirius will make 4 percent of its capacity, or 12 channels, available for use, through a lease or other arrangement, to a "qualified entity or entity." Within six months, another 4 percent of capacity must be on the air with noncommercial educational or information programming.

Finally, the newly merged company will file applications to provide Sirius service to Puerto Rico via terrestrial repeaters within three months of the merger's consummation.

What About HD Radio?

The FCC said it "found it unnecessary to impose a condition" requiring HD Radio in new satellite receivers, but added that it "recognized that important questions have been raised about hybrid digital radio that warrant further examination in a separate proceeding." A notice of inquiry will go out on the topic within 30 days after the adoption of the merger order.

The FCC also reiterated that satellite licensees are prohibited from using terrestrial repeaters to deliver local programming or advertising that's different from the nationwide content, and banned them from entering any agreement that would bar any terrestrial station from broadcasting live local sporting events.

Finally, as it approved the merger of XM and Sirius, the FCC repealed its own 1997 rule against their merging.

The Consent Decrees

As reported, the FCC also on Friday separately approved consent decrees with both XM and Sirius. The decrees end the investigations into the satcasters' compliance with FCC rules governing FM modulators and terrestrial repeaters, with XM paying $17.4 million and Sirius paying $2.2 million to the U.S. Treasury. Both will also take "additional remedial measures."

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