FCC takes up sat radio question


WASHINGTON -- The FCC said Wednesday that it will begin a "rulemaking" process that could help determine whether it will permit the nation's two satellite radio companies to merge.

In its "Notice of Proposed Rulemaking," the commission said it will decide whether it enacted a rule when it set up the competing Sirius and XM satellite radio services in 1997.

Sirius and XM contend that the commission enacted a policy statement rather than a rule when it established the satellite radio services. Opponents of the merger contend that the FCC set the rules of the road and that those rules must be changed in an official action before the commission can allow the merger to go forward.

FCC chairman Kevin Martin also has made statements that indicate the panel wrote a regulation that prevents the services from combining. Wednesday's NPRM asks for comments.

The combined company would have about 14 million subscribers.

In telecommunications matters, two agencies must approve the merger. In this case, the Justice Department examines the deal for its effect on competition, while the FCC decides if it is in the public interest. In its NPRM, the commission also said it will look into the deal's public interest ramifications at the same time it takes up the question about the dual licenses.

"If the commission concludes that the transaction would not violate a statute or rule of continued applicability, it next will consider whether the transaction could result in public interest harms by substantially frustrating or impairing the objectives or implementation of the act or related statutes," the FCC wrote.

Some merger opponents contend that taking up the question of the rule makes it look as if the FCC is less likely to approve the deal.

In a joint statement, Sirius and XM said the companies were pleased that the FCC had established a process to review the deal.

"The companies are pleased that the FCC has outlined the full process for reviewing the Sirius-XM merger," the statement said. "This action puts all of the FCC decisions regarding approval of the merger on track. We remain confident that the merger is in the public interest and continue to look forward to completing the regulatory approvals by year end."

Broadcasters, who are fighting the deal, also said they were pleased by the FCC's move.

"The National Association of Broadcasters is pleased the FCC is asking tough questions about this proposed government-sanctioned monopoly," NAB spokesman Dennis Wharton said. "We're hopeful that in the final analysis, regulators will conclude that competition serves consumers better than a monopoly, particularly when XM and Sirius have said repeatedly that they are not failing businesses."