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FCC Meeting With Sirius, XM

Washington — Contrary to reports early this week, the Federal Communications Commission (FCC) will likely wait until next week or later before ruling on the proposed Sirius/XM merger, as the Commissioners are still meeting with XM, Sirius and other “interested parties” to discuss the merger.

Commissioner Robert McDowell will meet with Sirius and XM and other “interested parties” regarding the merger this week and next week, said a spokesperson. Commissioner Deborah Taylor Tate’s office also said she will meet with similar parties during the same time frame.

A draft order regarding the merger was circulated to the FCC commissioners by chairman Kevin Martin earlier this week, leaving it up to the commissioners to vote on the proposal. Specifically, they must determine if the merger is in the public interest. The FCC would not confirm reports that Martin recommended the merger be approved, but an FCC spokesman said he would not deny those reports either.

The commissioners must decide by a majority on the merger. One analyst suggested the commissioners may vote along party lines with three republicans in favor.

Earlier this week, Commissioner Michael Copps, a Democrat, issued a statement noting, “As I’ve said from the beginning, this merger is a steep climb for me … I look forward to reviewing the chairman’s proposal and will consider it with an open mind.”

A ruling against the merger by the FCC would mark a departure from regulatory practice as the FCC in recent history has always followed the rulings of the Justice Department, which recently green-lighted the merger.

One key question, said analyst David Bank of RBC Capital Markets, is “what the merged entity will do to restart demand on the retail side, whether or not it’s possible and what they intend to do to achieve it?”

Analyst April Horace of Janco Partners noted, “I don’t think they are going to re-energize retail until you have an interoperable radio. It’s too confusing to the consumer because they don’t want to buy a radio that could be obsolete, even though the company will continue to support both satellite systems.”

Current satellite radios will be able to receive “Best of Both” programming — either XM plus some Sirius channels, or Sirius plus some XM channels, according to a spokesperson for Sirius and XM. Radios that can receive a la carte service plans that start as low as $6.99/month, will be available within three months of the consummation of the pending merger, the satellite radio companies told the FCC, in a filing dated June 13. True interoperable radios that receive full content from either Sirius or XM will be available within one year. These stipulations were part of new round of commitments offered by Sirius and XM this month, to “further demonstrate that the merger is in the public interest,” said the filing.

One leading consumer electronics retail chain said the complexity of the various new service plans to be offered if the merger is approved could prove a boon for specialty stores. “The a la carte programs are going to require salesmen to sell them now that there are a lot of choices. It’s not just A or B.”