Senate Democrats Weigh In on XM-Srius

Kerry, McCaskill, Cardin: Compromise proposal not enough.

By John Eggerton -- Broadcasting & Cable, 6/30/2008 1:49:00 PM

With the Federal Communications Commission members kicking around the compromise proposal for an XM Satellite Radio-Sirius Satellite Radio merger and both Democrats and Republicans still talking of wanting to get a decision out the door "soon," several high-profile Democrats weighed in saying that the proposal does not go far enough for their liking.

That came in a letter Friday to FCC chairman Kevin Martin -- who is circulating the compromise proposal -- from Sens. John Kerry (D-Mass.), Claire McCaskill (D-Mo.) and Ben Cardin (D-Md.).

For one, they said, the proposal to set aside 12 channels for minority programmers and another 12 channels for noncommercial informational programming -- a total of 8% of their spectrum -- is not enough to ensure "viable competition" to the combined company. They added that it needs to be at least 20%, or as many as 50 channels.

The senators also want XM/Sirius to be required to build HD-radio capability into their receivers, which means that they would be able to receive free, over-the-air signals, as well as the pay service. The legislators called that an "essential check" on the ability of the merger company to "stifle" competition from digital-radio broadcasting.

Also on their list was FCC enforcement of price caps, interoperable radios, open access and a la carte promises made by the two companies as part of the compromise.

"The proposed conditions fail to provide meaningful competition in the SDARS [satellite digital audio radio service] marketplace and would leave the merged entity in a position to exercise its market power in anticompetitive ways against other media, including free, over-the-air radio," they wrote.

They also argued that allowing the two companies to merge would violate the FCC's rules in establishing the two satellite-radio licenses. The FCC said when establishing the service that the two national satellite-radio licenses should not be held by one company. But the Democratic FCC chairman at the time, Reed Hundt, has since said that the rule was not meant to be set in stone and he would favor allowing them to merge.

They closed the letter by saying that they still opposed the merger, but that their suggestions would "mitigate the harms to the public and consumers" if the FCC goes ahead with the deal.

Currently, the commission is thought to be split 2-2, with the chairman and Republican commissioner Robert McDowell said to be OK with the compromise, the two Democrats on the commission not convinced that the compromise conditions are sufficient and Republican Deborah Taylor Tate still weighing them.

Two weeks ago, three Republican legislators wrote Tate to ask her to oppose the merger. They were among 69 who had written a letter exactly one year before to express their opposition.