Sirius-XM merger likely to be OKd

Federal regulators appeared poised Wednesday to give final approval to the merger of the nation’s only two satellite radio operators, which would bring together the two struggling companies after a 17-month quest.

Deborah Taylor Tate, a Republican who held the swing vote on the five-member Federal Communications Commission, reportedly was ready to vote in favor of the $3.9-billion merger if Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. agreed to new conditions.

Among them was paying $20 million to resolve outstanding FCC complaints against the companies, according to an agency official who requested anonymity because the terms had not been made public.

News of a pending merger approval, first reported by the Wall Street Journal, sent Sirius shares up 30 cents, or 12.6%, to $2.68 on Wednesday. XM rose 94 cents, or 10.3%, to $10.04.

Neither Tate nor a spokesman for Sirius responded to requests for comment. An XM spokesman declined to comment.

Sirius and XM proposed the merger in February 2007 in hopes of ending a costly battle for talent such as Howard Stern and Oprah Winfrey. But the plan drew fire from broadcast radio stations, which feared the combined clout of the two companies, along with lawmakers and public interest groups concerned about increased media concentration.

The National Assn. of Broadcasters, which fought the merger, said Wednesday that it was not giving up.

“This sweetheart deal for Wall Street speculators is premised on a promise that a monopoly will provide consumers with lower prices, better service and more programming formats,” Executive Vice President Dennis Wharton said. “Only members of the Flat Earth Society would buy into such specious nonsense.”

Broadcasters said one reason the merger should be rejected was that Sirius and XM frequently violated FCC rules, including having dozens of unauthorized ground-based transmitters. The $20-million settlement proposed by Tate probably involves those complaints.

Led by Sirius Chief Executive Mel Karmazin, who was chosen to head the joint company, executives from both firms have pushed hard to convince regulators that a merger wouldn’t constitute a monopoly. They argued that satellite radio competes with a wide variety of technologies, including traditional radio stations, Internet streaming and portable devices such as iPods.

The Justice Department approved the merger in March. But FCC Chairman Kevin J. Martin, a Republican, had said the deal faced a high hurdle with him because the commission barred any merger when it allocated the airwaves for satellite radio in 1997.

Martin announced his support for the merger last month after Sirius and XM agreed to freeze subscription rates for three years, offer cheaper packages of stations, sell radios that could receive both services and set aside 4% of their channels for noncommercial and minority programming.

With Martin’s fellow Republican Robert M. McDowell supporting the merger, Sirius and XM needed one more vote. Martin’s conditions were not enough for Democratic Commissioner Michael J. Copps, who voted against the deal this week. Democrat Jonathan S. Adelstein proposed tougher conditions, including a six-year price freeze and a requirement to set aside 25% of the channels for noncommercial and minority programming.

Adelstein said Wednesday that he also voted against the merger. But he hinted that approval was close, saying, “It appears they’re going to get a monopoly with window dressing.”

“We missed a great opportunity to reach a bipartisan agreement that would have benefited the American people,” Adelstein said.

--

jim.puzzanghera@latimes.com