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Merger may be music to public's ears

XM, Sirius users could see savings

Email|Print|Single Page| Text size + By John Dunbar
Associated Press / July 27, 2008

WASHINGTON - Sirius Satellite Radio Inc.'s $3.3 billion buyout of rival XM Satellite Radio Holdings Inc. means millions of subscribers will be able to receive programming from both services, and executives say it will create huge cost savings for the industry.

Federal regulators formally approved the merger of the nation's only two satellite radio operators Friday.

"I think it's going to be, in the end, a good thing for consumers and be in the public interest," said Kevin Martin, chairman of the Federal Communications Commission. "Consumers will enjoy a variety of programming at reduced prices and more diversified programming choices."

Subscribers will not have to buy new radios to receive a mix of programming from both services, according to the companies. But if they want to pursue a special pay-per-channel a la carte option, they will need new sets.

The FCC voted 3-to-2 to approve the buyout, with the tiebreaker coming Friday night from Republican commissioner Deborah Taylor Tate.

Tate had insisted that the companies settle charges that they violated FCC rules before she would approve the deal. The companies agreed to pay $19.7 million to the US Treasury for violations related to radio receivers and ground-based signal repeaters.

The long-running regulatory review was watched closely by investors anxious for a resolution and 18 million-plus satellite radio customers with questions about what effect the merger would have on their service.

The approval was a major blow for the land-based radio industry, which lobbied against the buyout. It was also opposed by consumer groups, various members of Congress, and state attorneys general.

"They kept each other on their toes," Democratic commissioner Jonathan Adelstein said of the two companies. "I hope they keep their edge and don't become a fat and happy monopoly."

Adelstein voted against the buyout as did fellow Democratic commissioner Michael Copps. Joining Martin and Tate in approving the deal was Republican commissioner Robert McDowell.

The companies said the combination would create hundreds of millions of dollars in cost savings and lead to greater choice in programming for subscribers and flexible pricing options.

Tate released a statement Friday night praising the commission's decision to punish the companies for rules violations before acting on the merger and supporting proconsumer conditions imposed on the deal.

Under the terms of the consent decree, XM will pay $17.5 million and Sirius will pay $2.2 million to resolve interference complaints and violations related to land-based signal repeaters the companies operate.

The merger agreement did not require the combined company to include a chip in its radios that allow customers to receive digital signals from land-based radio stations, which would have helped the land-based radio industry.

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