FCC Nears OK on Sirius, XM Merger
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Federal Communications Commission Chairman Kevin Martin confirmed published reports that he would support the transaction, with the companies agreeing to a series of conditions.
Those conditions include a pledge to make 24 radio channels available for noncommercial and minority programming, according to FCC sources. In addition, the companies would agree to cap prices, provide interoperable radios and offer programming on an "a la carte" basis.
"I am recommending that with the voluntary commitments they've offered, on balance, this transaction would be in the public interest," Martin said in a statement.
Martin's proposal to approve the deal could be circulated among the other commissioners as soon as this week, the FCC sources said.
Martin's decision could remove the last regulatory hurdle in a lengthy and heavily criticized move to combine the companies. Antitrust authorities at the U.S. Department of Justice approved the merger in March after concluding it would not harm consumers.
The Justice Department said satellite radio companies faced stiff competition from traditional and high-definition radio, iPods and MP3 players, and audio on mobile phones.
Shares of Sirius (NASDAQ: SIRI), the satellite radio home of shock jock Howard Stern and the National Football League, climbed 11 cents, or 4.3 percent, to $2.65 in early NASDAQ trade. The stock closed at $3.69 on February 16, 2007, the last trading day before the deal was announced.
XM (NASDAQ: XMSR) shares rose 4.9 percent to $11.40, down from $13.98 just before the announcement of the merger agreement. The company's programming features talk show host Oprah Winfrey and Major League Baseball.
The deal, which calls for the exchange of 4.6 Sirius shares for each XM share held, was originally valued at about $4.6 billion.
Under U.S. law, the FCC must determine whether a communications merger is in the overall public interest. In the case of the XM-Sirius deal, the agency also has to decide whether to waive a rule that has barred the two satellite radio companies from combining.
Interest in pay-radio has cooled in the 16 months since their deal was announced, as both XM and Sirius have muted their marketing push while lobbying regulators to approve the deal.
But as the number of cars with built-in satellite radio has increased, both services are still adding subscribers, who pay about $13 a month for more than 100 channels of music, news and talk programming.
XM ended the first quarter with about 9.3 million subscribers, vs. 8.6 million for Sirius.