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Isaac Brekken/AP
FCC Chairman Kevin Martin

FCC Approves Sirius–XM Merger

July 28, 2008 04:05 PM
by Anne Szustek
Late Friday the regulatory commission voted 3-2 to approve the merger of the two satellite radio companies, with more lenient requirements than some on the board desired.

30-Second Summary

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The Federal Communications Commission's decision that a Sirius-XM merger would not create a monopoly was the final governmental hurdle for the deal.

The five-person board stipulated that the combined satellite broadcaster allocate 8 percent of airtime for noncommercial programming, as well as institute a three-year price freeze.

Jonathan Adelstein, a Democratic commissioner for the FCC, said a week prior to the board's decision that he was to give the green light to the merger if the combined network dedicated one-fourth of its airtime to public and minority broadcasting, as well as not raise prices for six years. BusinessWeek argued after the FCC's final vote went through that Adelstein's more-stringent conditions "might have reduced the appeal of the merger."

FCC chair Kevin Martin said in a June 17 statement, “As I’ve indicated before, this is an unusual situation. I am recommending … this transaction would be in the public interest.”

Given the streamlined operations, shareholders are likely to benefit from a merger. Owners of Sirius and XM stock OK’d the deal in November. Since February, Sirius stock has dropped 43 percent to $2.25 per share, as of market close Friday. XM's price-per-share stood at $9.28, a decline of 40 percent over the same period.

The traditional radio industry, which has stood in stiff opposition to the merger since its nascent stages, had strong words for the FCC. “Given their systematic breaking of virtually every rule set forth by the FCC in their 11 years of existence, it would be curious if the Commission now rewards XM and Sirius with a monopoly,” said Dennis Wharton, executive vice president of the National Association of Broadcasters, in a press release.

But the Justice Department has also backed the merger, stating in March that, because the companies are in competition with traditional radio and digital downloads, there is sufficient competition to prevent Sirius and XM from raising prices monopolistically.

Headline Link: 'The FCC Approves the XM-Sirius Merger'

Background: Past developments in Sirius–XM merger

Reactions: Statement from National Association of Broadcasters

Opinion & Analysis: Shareholders are likely to benefit from merger

Reference: FindingDulcinea’s Web Guide to Radio

Related Topic: ‘Senate Votes to Overturn FCC Cross-Ownership Order’

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