Pro-Obama senators petition FCC to review XM + Sirius merger
The prospective partners in satellite radio may be prompted to consider expediting their deal arrangements, perhaps before November, in light of a letter to the FCC from likely policymakers, should a Democrat take the White House.
A trio of Democratic senators, including two who were early backers of Sen. Barack Obama's (D - Ill.) bid for the presidency, sent an open letter last Friday to US Federal Communications Commission Chairman Kevin Martin, calling on him to, at the very least, impose stricter requirements that XM and Sirius satellite radio produce interoperable radios.
Both merger partners had agreed to produce such devices for their subscribers within one year of completion of their deal, which was already approved by the Justice Dept. However, in the act of approval, the DOJ issued its own opinion stating that such a development could actually lead to reduced consumer choice, implying that leaving two separate services -- even though they're run by the same company -- would be a pro-competitive move.
"In light of a failure to provide interoperable radios notwithstanding Commission requirements to do so," write Sens. John Kerry (D - Mass.), Claire McCaskill (D - Mo.), and Ben Cardin (D - Md.), "we remain skeptical about the merged entity's ability to deliver on this fundamental requirement. To ensure that the HD radio and interoperable receiver mandates are enforced, as well as the a la carte radio promise made by Sirius [enabling subscribers to choose their stations], the FCC or another third party should certify these radios as well as enforce a robust open access requirement, so that the merged entity cannot be a gatekeeper to equipment attached to its system."
Sen. Kerry's early endorsement of Sen. Obama's candidacy was seen as critical to some of his primary wins this year, especially coming at a time when Kerry's 2004 running mate, former Sen. John Edwards (D - N.C.), was still actively in the race. Sen. McCaskill, meanwhile, was another early Obama supporter, and remains a player in, at least, the public game over who should get the vice presidential ticket. Sen. Cardin, however -- though a close colleague of former candidate Sen. Hillary Clinton (D - N.Y.) -- was a latecomer to the endorsement rally, having withheld his advocacy for any candidate until earlier this month.
Still, the advocacy for stricter control over this crucial merger could give companies a preview of both telecommunications and merger policy under an Obama administration. While opponent Sen. John McCain (R - Ariz.) has proven a skeptic of mergers during his tenure in the Senate, he has yet to express a widely disseminated viewpoint on this particular matter.
The senators are also calling upon Chairman Martin to further tighten the requirements of the merger, including having the merged entity lease as much as 50% of its system capacity to third party broadcasters, and perhaps 20% as a minimum, instead of the 12 channels or 4% the prospective partners have promised. They're also asking for new interoperable radios to also contain HD radio receivers as well, citing the FCC's historical requirement that all analog TVs be capable of receiving every channel.
"While we continue to believe that the wisest course of action is to disapprove the proposed XM-Sirius merger," they write, "we believe that the above conditions could mitigate the harms to the public and consumers that will occur in the event the Commission decides to change its rules regarding [satellite digital radio] licenses and approve the license transfer application."