XM/Sirius Merger Decision Nears
Posted on Jun 21, 2008 - 2:04pm by E. Phil Haley in General, Lifestyle, Technology
It’s been a long time coming, roughly twice as long as the FCC normally takes to perform a merger review, but it looks like a decision is finally on the horizon.
The primary factor in prolonging the review has been the fact that the FCC originally granted licenses to XM and Sirius on the condition the companies never merge; and government regulatory bodies are loathe to make 180 degree reversals. Their thought, back in 1997, was that a merger would stifle competition and result in a condition in which satellite radio consumers weren’t well served.
But the Department of Justice Anti-Trust Division, the folks charged with reviewing proposed mergers, so as to prevent potential monopolies, issued a statement that begins with the following statement:
“Evidence Does Not Establish that Combination of Satellite Radio Providers Would Substantially Reduce Competition”
I’m not entirely sure, with a decision by the DOJ (issued March 28, 2008) indicating a lack of anti-trust issues, why it’s taken so long for the FCC to bring this matter to a head but it may be that they had additional concerns. FCC Chairman Kevin J. Martin said, on June 15th,
“As I have indicated before, this is an unusual situation. I am recommending that with the voluntary commitments they (Sirius and XM) have offered, on balance, this transaction would be in the public interest.”
Soooo…just what might those voluntary commitments be?
Well, they’re not entirely distasteful. As a matter of fact, they’re pretty much the same conditions and commitments that Mel Karmazin, the Sirius CEO who would become CEO of the merged company, had laid out when the merger was initially proposed:
- A three year freeze on subscription prices.
- Provide radios, or modifications to existing radios, as well as antennas, that’ll allow subscribers to access both XM and Sirius broadcast frequency bands. (This could take up to a year!?!?!?!?!?)
- The merged companies price plans will range from $6.99 per month for 50 channels offered by one service to $16.99 a month for an existing service subscription plus a choice of certain channels offered by the other service. (This should happen within three months of the merger.)
- Customers will also be allowed to choose, and pay, only for the channels they want. This true a la carte option will require new radios.
- An “open technology” standard meant to allow for competition among manufacturers and give consumers a wide choice of retail outlets from which to buy their radios.
These all seem to me to be very consumer friendly conditions.
Oh, but there’s one more thing. The merged companies will be required to provide 12 channels, 4% of their total radio spectrum, for non-commercial services like educational and public safety programming and another 12 channels for programming run by minorities and women. That means 8% of their spectrum would be unavailable for revenue generation.
We already have NPR and PBS. Do we really need to saddle commercial broadcasters with providing non-revenue programming? I’m not entirely certain of the funding source(s) for this programming but, if it’s the merged company, I’m not at all pleased. This particular condition, not originally proposed by Mr. Karmazin, doesn’t seem to be all that “consumer friendly”; does it?
There is, of course, no guarantee that the merger will receive a thumbs up from the FCC. The Chairman is recommending approval but there are four other commission members and at least two of them must also vote to approve for the merger to go forward.
The vote can come anytime now, and almost certainly within the next couple weeks, so we’ll just have to wait and see.
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If I’m not mistaken, the non-commercial programming (similar to that of NPR and PBS) will be funded and/or provided by government agencies and/or non-profit agencies. I doubt that the newly merged company would have to provide programming and content for this, they must only provide the already significant contribution of the allocated spectrum.
I’m sure that you’re correct but my inquiries in regard to this issue have resulted in somewhat ambiguous responses. The content and its creation, it seems, is certainly the responsibility of individuals and entities other than the merged company. Production costs and who will bear them, however, seem to be in question. It appears this portion of the agreement is a “work in progress”.
Things are looking pretty bleak tech wise for us. If this merger doesn’t go through, we are quite posibbly looking at the death of satellite radio. 6 months ago, I would have said no problem, I still have my Sprint EVDO card to download audio books and podcasts, but now as I’m sitting here typing this, I have to keep checking the bandwidth monitor I had to install to make sure I comply with Sprint’s new 5 gigabyte data cap they imposed, so that’s out. The only two wi-fi carriers left are Flying J, who also cap their data, and idleaire, who just filed bankruptcy. I’ve been an XM subscriber since I bought the first Sony Plug and Play for $400. I don’t relish the thought of hgoing back to the dark ages, where fumbling with an am radio trying to tune in a staticy Rush Limbaugh or gargled farm reports was part of my driving routine.