FCC Tentatively Approves Sirius/XM Merger?

The Federal Communications Commission is reportedly on the verge of approving the merger of satellite radio operators Sirius and XM.

According to reports in The Wall Street Journal and elsewhere, the Federal Communications Commission has reached a tentative agreement to approve the merger between satellite radio operators Sirius and XM. Although terms of a deal have not been disclosed, reports have XM paying over $17 million (and Sirius another $2 million) to settle complaints about tower locations and exceeding transmission power limits for ground-based repeaters.

Initially announced way back in February 2007, the merger has been slowly wending its way through regulatory approval processes. On the face of the deal, it would seem to be hard to approve a deal that takes a market from two competing businesses down to one sole operator, but Sirius and XM have long argued their competition isn’t each other, it’s the Internet and other mobile entertainment and information services that are increasingly clamoring for consumers’ attention.

The FCC was considered likely to approve the merger once the Department of Justice granted its antitrust approval in March 2008; however, the agency was considered likely to attach additional terms to the deal. Reports have the combined company setting aside a small portion of its broadcast spectrum for educational and minority broadcasters and a pricing freeze for current customers. However, it appears the FCC will not mandate that the combined company integrated receivers into its radios that would enable listeners to pick up digital transmissions from local radio stations.

If the merger is approved soon, it would enable the combined company to launch a significant end-of-year holiday marketing push, in which it is expected to introduce new players that let customers choose between a fixed number of stations from either service in an a la carte manner; however, the combined company is also expected to drop a number of redundant programming offerings.

Both XM and Sirius have been taken to task by the FCC for hundreds of repeaters and terrestrial transmitters that have operated (or continue to operate) in violation of agency regulations. The review process has uncovered a number of transmitters operating in excess of allowed transmission power, and towers at locations differing from those reported to the FCC.