FCC may frown on XM-Sirius merger

by Jeremy Pelofsky, Reuters

Sirius Satellite Radio's acquisition of XM Satellite Radio would have to show that U.S. consumers would benefit in order to overcome the high hurdle for Federal Communications Commission approval, the agency's chairman Kevin Martin said on Monday.

"The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices," Martin said in a statement following the earlier announcement of the $4.6 billion deal.

"The hurdle here, however, would be high as the commission originally prohibited one company from holding the only two satellite radio licenses," Martin said.

The FCC licenses, created about a decade ago, included a restriction that prevented one company from owning them. However, Martin said last month that could be altered, if requested.

Analysts have said government approval would also hinge on whether antitrust authorities and the FCC consider the market broader than just satellite radio service and include Internet programming, iPods and other online music services.

A top Democrat in the U.S. House of Representatives also promised tough scrutiny of the transaction and raised questions about the impact on consumers, though Congress has a limited role in the agencies' reviews.

"I intend to review the proposed merger of XM and Sirius as to its effect on consumers of pay radio, as well as how this proposal impacts broader policy goals of ensuring diversity, localism, and innovation in radio service generally," said Representative. Edward Markey, chairman of the House subcommittee on the Internet and telecommunications.

The Massachusetts Democrat's panel has jurisdiction over the FCC and related issues.

In light of consolidation in the local broadcast radio market after the 1996 Telecommunications Act, Markey said "the merger of the only two satellite radio companies must be assessed with an eye toward ensuring that it does not have a similar, deleterious effect on diversity on the dial and localism in radio coverage and reporting."

article originally published at http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2007-02-19T2....

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