FCC Politics at Play in XM / Sirius Merger

At presstime Friday there was still a hold-up in the FCC vote on the XM/Sirius merger.

According to a source close to FCC Chairman Kevin Martin's side of the negotiations, Commissioner Deborah Taylor Tate, Martin's fellow Republican, had not yet signaled her willingness to sign off on the merger.

At issue, apparently, was how to penalize the companies over past transgressions. A deal was still expected but the timing remains uncertain. (For the latest, go to broadcastingcable.com.)

The delay is yet one more case of an FCC decision put off at the 11th hour. But a vote could pave the way for the two satellite companies to merge after a marathon 412-day FCC review. The lengthy period has forced the companies to put off deadlines for unwinding the deal and to condition financial moves, such as debt refinancing, on the possibility that it would not be approved at all.

XM and Sirius agreed last month to a series of conditions that would make the deal more palatable to critics of the merger. Legislators and commission Democrats who'd expressed their disagreement, came back with proposals for even tougher conditions, but the FCC on a party-line vote approved the deal essentially as offered.

According to the source, the conditions include a three-year price freeze, but one that would still allow the companies to pass through programming costs; a la carte and family-friendly programming offerings; a commitment to interoperable radios and outside receivers; and an 8% set-aside (24 channels) for noncommercial and commercial independent programmers.

To get the deal done, XM and Sirius also agreed to pay a combined $20 million to settle separate complaints that they had located terrestrial repeaters without the proper authority, and had exceeded power levels that resulted in interference.