FCC Formally Announces Satellite Merger ApprovalFCC Formally Announces Satellite Merger Approval
July 29, 2008
The FCC has released its formal announcement of the approval of the XM-Sirius merger. In its statement, the FCC confirmed it voted in favor of the satcasters' application to merge, which it determined "with the voluntary commitments" is in the public's interest. The Commission determined that the merger benefits consumers "by making available to them a wider array of programming choices at various price points and by affording them greater choice and control over the programming to which they subscribe."
The FCC "determined there was insufficient evidence in the record to predict the likelihood of anticompetitive harms." It added that its evaluation presumed that the "relevant market" was just satellite radio. "This approach permitted the Commission to protect consumers from potential adverse effects of the transaction while also allowing the Commission to balance potential harms against potential public interest benefits." The FCC decided that with the conditions (which must remain in effect at least three years) placed upon the deal, the merger was now in the public interest.
The merger conditions, as previously reported, include: capping prices for three years, offering a la carte programming to subscribers within three months of the merger closing, offer eight percent of satellite bandwidth to "certain qualified entities" and non-commercial & educational programming, offer interoperable receivers at retail within nine months of the merger, refrain from allowing any exclusive manufacturing of receivers or preventing manufacturers from including other technology in receivers such as HD Radio or iPod compatibility and allow Sirius service in Puerto Rico within three months of the merger.
The FCC noted the push to include HD Radio technology in new satellite receivers, and has commissioned a notice of inquiry within 30 days of the merger into the matter. The Commission also reiterates that the satcasters cannot use terrestrial repeaters to distribute local content, nor can they prevent terrestrial radio stations from airing local sports broadcasts. The FCC repealed the all-important 1997 prohibition on allowing two satcasters to merger, and accepted the Consent Decrees from XM and Sirius that pay out $17.4 million and $2.2 million, respectively, in fines.
In a statement, Chairman Kevin Martin said that the merger met their "high hurdle" and commended XM and Sirius "for committing to offer consumers more choice and flexibility in how they purchase channels. I have long believed that consumers should be able to buy and pay for only those channels that they want. Such a free market approach to programming – whether its music or television – would benefit consumers through lower prices and more control. Consumers will be able to enjoy the best of programming on both services and pick and choose channels at lower prices. With these options as well as the companies’ agreement not to raise prices for three years, consumers should be better off as a result of this merger."
Martin added that he supports "the parties’ commitment to an open technical standard that will allow for a competitive market to develop for radios that carry the satellite radio signals. Any device manufacturer will be able to develop satellite receivers and to incorporate other technology, such as HD radio, iPod ports, and Internet connectivity so long as it will not result in harmful interference with the merged company's network." He added that he also supports "the Commission soon issuing a notice of inquiry to gather more information about whether HD chips or any other audio technology should be included in all satellite radio receivers."
Commissioners Michael Copps and Jonathan Adelstein voiced their dissent in their own statements. According to Copps, "The inescapable logic...is that by 2011 satellite radio subscribers will face monopoly price hikes by a company with the incentive and ability to impose them. No one has been able to explain to me how this could possibly serve the public interest." He adds that the three Commissioners voting in favor of the merger believe that "satellite radio consumers will be better served by a regulated monopoly than by marketplace competition. I thought that debate was settled—as did a unanimous Commission in 2002 when it declined to approve the proposed merger between DirecTV and Echostar."
Copps concluded, "In the end, after cutting through all the heat and noise and lobbying this proceeding has generated, we are left with the unshakable reality of a merger-to-monopoly in a market that could sustain competition. I can find no precedent or public interest justification for that outcome."
Instead of taking the merger to task a la Copps, Commissioner Adelstein discussed the previous violations and other issues surrounding the satcasters. Adelstein called the combined $19.6 million fines "one of the largest voluntary contributions ever agreed upon by the Commission for violations of Commission rules" and added that "the brazen nature of these violations indeed warrants this substantial monetary contribution and rigorous oversight and reporting obligations." He added that while he hoped the FCC would enforce all elements of the Consent Decrees, "but history suggests otherwise."
The complete statements from the FCC and its Commissioners can be found at FCC.com.
source: http://streetandindustrynews.com/goout.asp?u=http://www.fmqb.com/Article.asp?id=649171 Back | Print version | SEND ARTICLE VIA E-MAIL | 
