FCC Chief Questions XM/Sirius Deal Terms

FCC Chair Kevin J. Martin has expressed concern in two private conversations that critical fee and programming details concerning the proposed XM/Sirius satellite radio merger have not been made sufficiently clear. Sirius CEO Mel Karmazin testified last Wednesday before the antitrust task force of the House Judiciary Committee that prices would not be raised and that subscribers would enjoy vast new offerings. Martin said subscribers might infer that they will be getting both companies' lineups for the cost of their original subscription to one or the other, which is not necessarily the case. Karmazin said yesterday that he meant subscribers will not face price increases on their existing service, and those who want programs from both services will pay less than the combined rate of $25.90. "We will need to carefully look at what price will be frozen and what consumers will be getting for that price,” said Martin. The FCC gave the two companies satellite radio licenses in the 1990s on condition that they never merge, a ruling it will have to waive for the transaction to take place. The companies will also have to pass the Justice Department's antitrust division. Karmazin will appear before a second House telecommunications panel today.

Sources: New York Times, Reuters
Commentary: Sirius and XM Satellite to Merge - If They Can Clear Regulatory Hurdles • Satellite Radio: Best Merger Play Between XM and Sirius Bonds • Sirius and XM Soar on Merger Speculation, Tank on FCC Chairman's Comments
Stocks to watch: Sirius Satellite Radio Inc. (SIRI), XM Satellite Radio Holdings Inc. (XMSR). Competitors: Clear Channel Communications Inc. (CCU), Cumulus Media Inc. (CMLS)

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