Washington

FCC: Agreement in Principle on XM-Sirius

FCC chairman Kevin Martin, swing vote commissioner Deborah Taylor Tate agree on terms essentially the same as those proposed by the two satellite-radio companies. 7/24/2008 10:03:00 AM Eastern

A spokesman for Federal Communications Commission chairman Kevin Martin confirmed that there is an agreement in principle to approve the XM Satellite Radio-Sirius Satellite Radio merger after Martin and swing vote Deborah Taylor Tate came to an agreement on terms essentially the same, with a few changes, as ones proposed by XM and Sirius in a letter to the FCC last month.

XM/Sirius

Commissioner Robert McDowell already voted to approve the deal under the terms floated by Martin after they were proposed by the companies. Stockholders and the Justice Department already gave their approval, but the FCC is in day 411 of its review.

Tate had not cast her vote at press time, but spokesman Rob Kenny said the chairman was hopeful that a vote would come in the next 24 hours.

A source familiar with the negotiations with Tate said the conditions would 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 and open receivers; and the 8% set-aside (24 channels) for noncommercial and commercial independent programmers.

Two proposed changes from the XM/Sirius proposal should please groups like Media Access Project and others concerned about open access. According to an aide to one of the commissioners,  at Tate's urging, the deadline for making the receiver specs available for outside suppliers has been moved up to "immediately," and interoperable radios will be available within nine months rather than a year. XM and Sirius are said to be OK with moving up the dates.

Hill Democrats and Democratic FCC commissioner Jonathan Adelstein pushed for much tougher conditions, but Tate was the swing vote and signaled that the lack of an FCC enforcement action against XM and Sirius for violations of FCC rules was the major obstacle to approving the deal.

According to that source, XM-Sirius and Martin came to terms on that consent decree, settling issues related to their placement of terrestrial repeaters and the power levels of some receivers. It is currently being circulated among the other commissioners for their approval, the source said, with Tate's approval expected to follow shortly thereafter.

XM will pony up $17.5 million and Sirius $2.2 million to settle the complaints. Why the big difference? XM had hundreds of unauthorized repeaters and continued to operate them while it was seeking authorization, while Sirius had 11 unauthorized repeaters and turned them off until it got authorization.

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