FCC Gives Go-Ahead For Satellite Radio Merger
The Federal Communications Council has given the green light for Sirius Satellite Radio to purchase XM Satellite Radio for $3.3 billion, a move that will merge the two satellite radio companies into one service. The merger was approved by a FCC vote of 3-2, with the tie-breaking vote going to Republican Deborah Tate.
Before the vote, both satellite radio companies agreed to pay over $19 million to clear FCC violations regarding the illegal operation of terrestrial ground transmitters that exceeded power limits. XM paid a significantly higher amount of money for these violations since they continued to operate illegal ground transmitters until 2006 while they sought FCC approval. Both satellite companies currently operate ground transmitters in large metro cities, including Sacramento and San Francisco, where satellite signals may be interfered with by large buildings, tunnels and freeway overpasses.
Both companies, which combined have a total of nearly 20 million subscribers in the United States and Canada, say the merger would benefit the satellite radio industry. According to Sirius and XM, increased competition from other music services such as digital music players like iPods and Internet radio are catalysts in favor of a satellite radio merger; both services currently offer online streaming of many talk and music stations heard on Sirius and XM respectively.
Sirius and XM have promised their current customers that rates will not increase as a result of this merger. However, both companies announced potential “tier” plans back in March that could bill customers over $20 a month for service depending on which channels they prefer to receive. It’s unclear whether XM’s four commercial music stations, operated by Clear Channel, will carry over post-merger or if XM will pay Clear Channel to remove these stations.
In November, Arbitron announced they will begin listing satellite radio in their regular ratings reports. Currently, XM leads in music ratings while Sirius has strength in talk programming, which includes shock jock Howard Stern, homemaking advocate Martha Stewart and a GLBT-themed talk station.
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