It's finally been reported that Federal Communications Commission Chairman Kevin J. Martin will support a merger between XM and Sirius. It's about time.
The Department of Justice signed off on the deal back in March with a lengthy statement that began with the following paragraph:
"After a careful and thorough review of the proposed transaction, the Division concluded that the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers. The Division reached this conclusion because the evidence did not show that the merger would enable the parties to profitably increase prices to satellite radio customers for several reasons, including: a lack of competition between the parties in important segments even without the merger; the competitive alternative services available to consumers; technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers."
With that statement in hand it's a bit baffling, at least to me, regarding the reasons behind the delay on the part of the FCC in bringing this matter to a close. It could be that Chairman Martin and the commission had misgivings going beyond anti-trust issues.
There is some evidence of this as indicated by the conditions to which the commission and commissioner have asked Sirius and XM to agree. They are as follows:
- Programming price caps. This will mean a three year freeze on subscription prices.
- A la Carte programming (meaning we, as subscribers, can pick and choose the programming we prefer rather than predefined packages). This will be available within three months of the merger.
- Provide radios compatible with both Sirius and XM frequencies. For some inexplicable reason, it may take up to a full year for current subscribers to receive radios, modifications and antennas that'll allow them to receive programming from both vendors.
- Open the technology market so that a wide variety of both manufacturers and retailers can provide radios to consumers.
Unfortunately, there is one final condition to which Sirius and XM have agreed and that is to
"set aside 4 percent of their radio spectrum, or 12 channels, for noncommercial services such as educational and public safety programming and another 12 channels for programming run by minorities and women; groups that are underrepresented in entertainment broadcasting."
That last requirement just makes me stutter so I'll refrain from further comment.
The a la carte programming and pricing is tentatively set to play out in the following way:
- The combined company will offer pricing plans ranging from $6.99 per month for 50 channels offered by one service to $16.99 a month for an existing service subscription plus a choice of certain channels offered by the other service.
- Customers will also be allowed to choose and pay only for the channels they want. This true a la carte option will require new radios.
Of course, there's absolutely no guarantee that the commission will vote to support the merger. FCC Chairman Martin stated
"As I've indicated before, this is an unusual situation. I am recommending that with the voluntary commitments they have offered, on balance, this transaction would be in the public interest."
But that doesn't mean the commissioners will agree to support the deal. According to the Washington Post,
"FCC Commissioner Michael J. Copps, a Democrat, has been cautious about the merger, saying he didn't see how it would benefit consumers. He and several lawmakers have, however, pushed for conditions similar to those agreed upon by Sirius and XM."
We'll just have to wait and see. There should be a decision rendered within the next week or so.
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