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 Watch as broadcasters try to neuter the XM-Sirius deal.The National Association of Satellite Radio Killers. That's what former National Association of Broadcasters chief Eddie Fritts joked should be the terrestrial radio and television lobbying group's name. Fritts was kidding, but only sort of. In fact, the label aptly describes the group's intense campaign to nix the $13 billion hookup between XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. The radio industry believes the deal will be a major threat to its listenership and advertisement revenue.
The Department of Justice approved it in March, with no conditions. Now opponents such as the NAB have turned their attention to the Federal Communications Commission, which has yet to complete its review of the merger. The FCC is unlikely to reject the deal -- it typically approves transactions the DOJ has already OK'd -- but ferocious quarreling will likely take place among the agency's Republican and Democratic commissioners over possible concessions. FCC Chairman Kevin Martin wanted commissioners to vote on the matter at the agency's May 14 meeting, although that now looks unlikely.
The internal FCC clashes reflect a larger battle taking place in Washington among public interest groups, broadcasters and the satellite radio companies over the future of radio (and television, if XM-Sirius rolls out satellite TV to the car). The agency's two Democratic commissioners, Michael Copps and Jonathan Adelstein, want to ensure that diverse viewpoints are available. Both believe Martin and the agency are moving in the wrong direction, particularly with rules approved in December loosening restrictions on newspaper and broadcast mergers. They hope Martin and Sirius CEO Mel Karmazin will agree to have the merged company make some of its channel capacity available to new noncommercial educational programming. The measure would be similar to what the 1992 Cable Act required for satellite TV companies. Existing programming shouldn't count. The agency could go another route entirely by making XM-Sirius provide a portion of its spectrum to Primosphere LP, a rival company that wants to offer a competing satellite radio service. That might convince Copps and Adelstein, who are also big backers of open-access provisions that would require XM-Sirius to make its network available to any receiver or device. Karmazin himself has offered price regulations and a la carte channel choices, which the FCC is sure to support. If Copps and Adelstein approve the transaction, it would raise the ire of high-profile friends of traditional radio, including Senate Commerce Committee Chairman Daniel Inouye, D-Hawaii, Antitrust Competition Policy and Consumer Rights Subcommittee Chairman Herbert Kohl, D-Wis., and Sen. Byron Dorgan, D-N.D. A few House members, including Reps. Pete Sessions, R-Texas, a former SBC Communications Inc. executive; Carolyn Maloney, D-N.Y.; and Sen. Orrin Hatch, R-Utah, support it. It's unclear whether lawmakers would back toxic conditions broadcasters want inserted into the deal. For example, Clear Channel Communications Inc. wants the FCC to require XM-Sirius to lease 50% of its satellite radio spectrum to a rival. "It would be a dealbreaker," says Blair Levin of Stifel, Nicolaus & Co. "XM and Sirius would pack up and go home." If nothing else, NAB's pressure will strengthen the broadcasters' campaign to make sure the agency doesn't let XM-Sirius provide local news and current affairs programming. Local programming by satellite radio could be a "killer" of terrestrial broadcasters' core advertisement revenue base, as well as their effort to provide more programming through digital radio. Blocking satellite from local content doesn't sit well with some Washington insiders. "I would argue that [terrestrial broadcasters] have a monopoly on local programming and let's bring some competition," says Gigi Sohn, director of consumer advocacy group Public Knowledge.- Ron Orol See the full issue of the 4.28 Deal newsweekly See Dealscape: FCC's May agenda: Block D auction on, XM-Sirius deal not See TheDeal.com story: FCC to hold up XM-Sirius beyond walk date See Dealwatch: XM-Sirius CategoriesComments
From: John,
Think of the billions of dollars Primosphere (and others) would save on satellites! This is American Innovation 2.0: use the government to steal from your competitors.
Posted on:
April 25, 2008 2:17 PM
From: Frank,
The FCC knows that the DOJ was correct in its decision to let the deal go through without "conditions". Everyone knows this is not a monopoly and that the only hangup is the entranched opposition from the NAB. Come on FCC, step up to the plate and aprove this deal!
Posted on:
April 28, 2008 11:31 AM
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It is obvious from all the resistance that the competition is there so the FCC needs to approve merger and stop punishing Sirius and XM and their stock holders.