FCC Invites Public Opinion on the Proposed XM-Sirius Radio Merger

By Rahul Prabhakar

TMCnet Contributing Editor

 

The Federal Communications Commission (FCC (News - Alert)) is trying to rule out any possibility of a foul play by closely monitoring the plea for merger presented by XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc., according to an Associated Press report.

 

The decision to merge was made public by the two satellite radio companies on February 19, 2007, creating enough noise not only in the US congress or the Wall Street Journal, but also within the communication industry. Considering that FCC has passed the ball onto the public, this drama seems anything but over.

 

In a recent notice, the FCC has urged American citizens to furnish their opinions about the proposed merger.

 

The FCC is requesting that applications to hear comments be snail mailed or e-mailed to them no later than July 9. The commission will reply to the concerned parties by July 24, 2007 and declare its conclusive stand by the year-end.

 

Public interest is a top priority for the FCC, therefore it will objectively weigh the pros and cons of allowing one company to own and operate two licenses. The transaction is estimated to be worth $4.7 billion, not surprisingly then, the stakes are extremely high.

 

The merger has also attracted the likes of Department of Justice, who will probe into the deal to understand the nature of competitive practices involved. In addition to the FCC, the two radio companies will be required to acquire clearance from the Department of Justice as well.

 

Under the procedures outlined by the FCC, once the process of filling applications is initiated, there will be 180 days for the Commission to study the merger, after which it must make a decision. It is likely that the merger will bear fruition by December, the Associated Press reported.

 

Till then, both XM and Sirius may have to wait at the edge of their seats, as this merger faces several upcoming challenges. To begin with, it is mandatory to convince the Department of Justice that the merger will not spark off any anticompetitive practices in the marketplace. As the concerned parties involved happen to be the ‘only’ satellite radio companies in the country, their amalgamation is being closely monitored.

 

Second, the terms of the license, under which these radio companies were formed nearly ten years ago, do not permit control of one company over the other.

 

According to the terms of the license, a licensee should “not be permitted to acquire control” over the other, with a view to facilitate “sufficient continuing competition” in the market.

 

The FCC will likely have to make a crucial decision of whether or not to allow the termination of this condition, the Associated Press report said.

 

Lawyers, lobbyists, and executives from both companies argue that competition in the entertainment market has undergone a drastic change ever since the formulation of these companies in 1997. According to them, it no longer involves just the satellite radio, but extends further to other “audio entertainment” gadgets, such as, Apple (News - Alert) iPods, digital “high definition” radios and cell phones.

 

So far the news of merger has not been well received, either by the consumers or the National Association of Broadcasters, who have opposed it downright.