Satellite radio merger approved

Deal made after 16 months

By John Dunbar ASSOCIATED PRESS | Saturday, July 26, 2008

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Federal regulators formally approved the merger of the nation's only two satellite radio operators Friday, ending a 16-month-long drama closely watched by Washington and Wall Street.

Sirius Satellite Radio Inc.'s $3.3 billion buyout of rival XM Satellite Radio Holdings Inc. will mean 18 million-plus subscribers will be able to receive programming from both services. Executives say it will mean huge cost savings that will lead to a first-ever profit for the relatively nascent industry.

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

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

Related story:KARA ROWLAND/FCC nears XM-Sirius merger

FCC Chairman Kevin Martin confirmed the final vote Friday night.

"I think it's going to be, in the end, a good thing for consumers and be in the public interest," he told the Associated Press.

The approval appeared to hit a glitch on Friday when a dispute surfaced between the chairman and Ms. Tate over the violations, but differences between the two were quickly resolved, and the approval went forward.

The long-running regulatory review was watched closely by exasperated investors anxious for a resolution as well as satellite radio customers with questions about what impact the merger would have on their service.

The approval was a major blow for the land-based radio industry, which lobbied hard against the buyout. It was also opposed by consumer groups, various members of Congress and state attorneys general, all of whom argued a satellite radio merger would hurt consumers and was not in the public interest.

"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."

Mr. Adelstein voted against the buyout as did fellow Democrat Michael Copps. Joining Mr. Martin and Ms. 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.

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