FCC Seeks Input On Whether Rule Prevents XM/Sirius Merger


The FCC has sought comment on XM/Sirius' contention that there is no FCC rule preventing one satellite radio company from holding both national satellite licenses.

When the FCC issued the licenses to the companies in 1997, it said ""one licensee will not be permitted to acquire control of the other remaining satellite DARS license. This prohibition on transfer of control will help assure sufficient continuing competition in the provision of satellite DARS service."

XM/Sirius, which want to merge and thus combine ownership of the licenses, has argued that the language is a policy statement rather than a binding commission rule because it was never codified in federal regulations. In any event, they also want the FCC to waive alter or modify the "rule" because the merger would be in the public interest and because the market has changed and .

In a notice of proposed rulemaking, which signals the commission's desire to settle the issue, the FCC seeks comment on whether the prohibition is binding. If so, it wants to know whether it should waive or modify it, as XM/Sirius have asked. If the FCC concludes it is not binding, the commission would then proceed to determining whether the merger is in the public interest, but points out that XM/Sirius have the obligation of proving "by a preponderance of evidence" that that is the case.

"NAB is pleased the FCC is asking tough questions about this proposed government-sanctioned monopoly," said NAB Senior VP Dennis Wharton. "We're hopeful that in the final analysis, regulators will conclude that competition serves consumers better than a monopoly, particularly when XM and Sirius have said repeatedly that they are not failing businesses." 

FCC Chairman Kevin Martin responded to XM/Sirius' intial argument back in March by suggesting that lack of codification did not necessarily mean it was not binding: "I haven't seen their filing, but let me just say generically, without this issue...not every aspect of a commission order is codified in a federal regulation, but that doesn't mean the commission's orders themselves aren't binding."