FCC Closer To Approving Sirius/XM Merger
By Amy Gilroy -- TWICE, 7/21/2008 7:50:00 AM
Washington — The Federal Communications Commission (FCC) inched closer to approving a Sirius/XM merger, as FCC commissioner Jonathan Adelstein said he would approve the deal, but with stricter conditions, an FCC staff member confirmed.
The conditions would require the merged company to include HD Radio on any satellite radio product it subsidizes that also includes an AM/FM tuner, according to an Associated Press report. Stipulations would also include a six-year freeze on service fees and that Sirius and XM devote 25 percent of spectrum to minority and public-interest programming, said the AP. Adelstein’s staff could not confirm the conditions at press time.
A pro-merger vote by either Adelstein or Deborah Taylor Tate, two undecided commissioners of the FCC, would result in merger approval.
Other parties, including senators and radio stations, have also asked the FCC in the past to mandate that a merged Sirius/XM include HD Radio in their products.
Industry members contacted on Friday were puzzled by these demands. Crutchfield mobile merchandise senior director Carl Matthews said, “It doesn’t make any sense to me. Let the market decide. If customers want HD Radio in there, and one product has it, they’ll buy that one. It’s like mandating having AM/FM in there and that doesn’t make any sense either. It’s a satellite radio.” He added, “From a retail perspective all it would do is add cost to a lot of people who don’t need it and don’t want it.”
Eclipse marketing director Michael West noted that suppliers purchase subsidized satellite radio components from the satellite radio companies. He wondered if the FCC would require satellite radio companies to subsidize new components that were compatible with HD Radio. “Any time politicians come up with an idea that is not market-based, it’s usually a problem,” said West.
iBiquity, the developer of HD Radio, said in a recent FCC filing that it would cost no more than $12 to $15 in components to include HD Radio in satellite radio products and that “conditions” should be imposed on the merged satellite radio company and not “equipment manufacturers.”
iBiquity said a merger “presents an opportunity for the merged satellite company to use its position in the marketplace to slow or block the rollout of HD Radio technology … even if a small portion of the cost savings associated with a merger were redirected to impact the rollout of HD Radio technology, it could have a catastrophic impact on competition.”
Executives at Toyota and General Motors recently filed comments against such an HD Radio requirement with the FCC.
Sirius and XM were not available for comment.
A staff member of Tate’s office said, “She doesn’t have a stance right now. She’s having the necessary meetings to make the right decision,” regarding the merger.
