XM and Sirius submit FCC transfer request

Thursday, March 22, 2007

Today, the satellite radio providers XM Satellite Radio and Sirius Satellite Radio submitted a joint application to transfer control of their ground and space-based transmitters to the new, merged company. This is a major step for the XM/Sirius merger deal, as FCC approval represents a major hurdle for the merger. This document also answers some questions that have plagued subscribers of both services.

While there is not much information for the casual listener, two of the most frequently asked questions have been addressed, at least in part:

Pricing has been clarified, to some exeent. From the FCC filing: “After the merger, customers may elect to receive fewer channels at a monthly price lower than $12.95;substantially similar programming at the existing $12.95 price; or more channels, including someof the ‘best of both’ networks, at a modest premium to the cost of one service, and considerablyless than the cost of subscribing to both services.” The document goes on to explain that channel blocking will be available, and that credit will be given for blocked channels.

The filing also addresses the potential need for new receivers. “Subscribers could continue to use their existing radios or eventually purchase new radios capable of receiving all of the content of both services when they become available.” Apparently, some programming will be available on both networks, but this will be limited. To get the full range of programming, subscribers will need new equipment.

Another major stumbling block for the merger deal is the potential for monopoly. To counter the arguments that the merged company will become a monopoly, the document goes on to describe the nature of satellite radio’s competition: HD radio, Internet radio, AM and FM radio, portable media players, mobile phones, and even CD players. “It is clear that all of the above providers view themselves as being in direct competitionwith each other,” the document alleges, and then goes on to quote statements by the National Association of Broadcasters in support of this assertion. “local radio stations compete for listeners with other forms of audio delivery offering an almost unlimited array of content. IPods and other MP3 players, music [subscription] services, podcasting and the Internet streaming of U.S. and foreign radio stations literally provide content from around the world to listeners in each local radio market in America.”

As this is only the first step in the FCC process, and the FCC is only one of three major steps in the merger process, the deal is far from over. However, convincing the FCC that the merger should happen will remove a major barrier in the companies’ efforts.