- The Washington Times - Monday, March 24, 2008

Sirius Satellite Radio Inc. and XM Satellite Radio Inc. are one big step closer to merging after antitrust officials yesterday signed off on the $13 billion deal, which now rests in the hands of the Federal Communications Commission.

Concluding that the merger would not “substantially lessen competition,” the Department of Justice said it is “not likely to harm consumers.” The approval comes more than a year after the two companies announced their plans to combine in February 2007.

Over-the-air broadcasters and several consumer groups sought to block approval of the merger, which they said would create a satellite radio industry monopoly.

But the DOJ said the two companies compete in a broad market that includes other audio services such as broadcast radio, HD Radio, Internet radio and portable media players. The agency said the two companies would not have a financial incentive to raise prices on consumers and cited cost savings from the merger as further evidence a combined company wouldn’t need to.

The ball is now in the court of the FCC, which must consider whether the merger is in the public interest. Chairman Kevin J. Martin, a Republican, has said the deal faces a “high” hurdle since the FCC issued an accompanying order in 1997 - when it granted XM and Sirius their licenses - that barred the same company from owning the two licenses.

While the FCC decision is separate from the antitrust proceeding, the media-regulating agency typically waits for the DOJ to decide a case first because it pays close attention to the department’s analysis of market conditions.

The FCC, comprised of three Republicans and two Democrats, could grant the merger, deny it or approve it but require the companies to make certain concessions, as it did with the merger of AT&T; Inc. and BellSouth Corp. Those companies agreed to adhere to so-called net neutrality principles for two years, among other conditions. A private equity firm called Georgetown Partners has suggested in filings with the FCC that the two companies be forced to lease one-fifth of their channel space to a minority-owned entity.

XM and Sirius, which each charge subscription fees of $12.95 a month, last summer unveiled several new a la carte pricing schemes that would be offered if regulators approved the deal. One option would allow subscribers to choose 50 channels for $6.99 a month with additional channels priced at 25 cents each. Another option of 100 channels would allow Sirius customers to choose from some of XM’s best programming, and vice versa, for $14.99 a month. The announcement included several other packages, including family-friendly, mostly music or news, sports and talk.

D.C.-based XM has about 9 million subscribers and boasts personalities such as Oprah and shock jocks Opie and Anthony, with content from Major League Baseball, IndyCar Series Racing and college footballs Bowl Championship Series. Sirius of New York has around 8 million subscribers with a lineup that includes Howard Stern, Martha Stewart, the National Football League, NASCAR and the National Basketball Association.

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