XM/Sirius: Adelstein Proposes New Conditions

FCC commissioner's plan offers new set-aside, price-hike, terrestrial-reception proposals.

By John Eggerton -- Broadcasting & Cable, 7/18/2008 11:00:00 AM

Federal Communications Commission member Jonathan Adelstein took chairman Kevin Martin up on his challenge to pony up alternate proposals for approving the XM Satellite Radio-Sirius Satellite Radio deal.

Adelstein circulated conditions Thursday under which he would approve the deal but he has not heard back from the other commissioners, a source said. Martin challenged the other commissioners to put their cards on the table, telling reporters last Friday that they needed to "figure out what they want and propose it."

Adlestein did just that with a plan that includes setting aside 25% of the merged company's satellite capacity for noncommercial and independent programmers (10% for noncommercial, 15% for commercial); a six-year moratorium on price hikes; and a requirement that some radio receivers also be able to receive HD radio from competing terrestrial stations.

The companies offered to set aside 12 channels -- or about 8% of their capacity -- for noncoms and outside programmers and agreed to a three-year price cap.

Adelstein is looking to close what he saw as a loophole in the company's price-cap proposal, according to a source familiar with it. While the companies wanted to pass along programming costs, his proposal would not allow them to do so.

But while some have proposed requiring all satellite receivers to be able to also tune in terrestrial radio, Adelstein said that requirement would only kick in if XM/Sirius were subsidizing the price by bundling it with the service as cellular-phone companies do.

Adelstein is also proposing an independent entity to monitor compliance rather than the FCC.

Martin circulated the XM/Sirius proposal indicating his support. Republican commissioner Robert McDowell is said to have voted to approve those conditions, but the others had not weighed in.

Hill Democrats have been pushing for similar conditions to the ones Adelstein has proposed. But an aide to the commissioner said it was a coincidence that the proposal came soon after House Telecommunications & Internet Subcommittee chairman Ed Markey (D-Mass.) sent a letter to Martin asking the FCC to up the price cap to six years, enlarge the carve-out of channels and mandate HD chips in receivers.

While most were looking for Republican commissioner Deborah Taylor Tate to be the third vote for the deal, Adelstein was still thought to be in play, particularly after Hill Democrats, including Markey, indicated that they could live with the deal under certain conditions -- conditions Markey toughened in his letter this week.

But no FCC deal is done until there is a vote, and the FCC's approval won't matter if the companies aren't ready to comply with the more-stringent conditions. Then there is still the x-factor of commissioner Tate, a generally deregulatory commissioner who could still vote to approve the less-stringent conditions originally proposed by Martin,

Neither XM nor Sirius spokespersons had returned repeated calls for comment at press time. The commissioners had not responded either, although a source said that during the back-and-forth over conditions in the past few weeks, a majority of the commissioners in play (commissioner Michael Copps is said to still be unconvinced) expressed support for the general outlines of the conditions.