Martin repeals law of competition?

That’s what many will be saying on news that FCC Chairman Kevin Martin is prepared to give thumbs up to the long-pending proposed merger of XM Satellite Radio and Sirius Satellite Radio. The two companies will meet a number of conditions to earn Martin’s yea vote. According to reports, they will agree to a three-year cap subscription, offer a la carte program menus, make interoperable receivers available within a year of closing the merger, release manufacturing specs to allow unlimited competition from receiver manufacturers, and provide 12 channels for non-commercial program services and 12 more for minority services, amounting to 8% of total channel capacity.

No other commissioners have weighed in on the merger yet, but it is believed that that the best chance for XM/Sirius to get the votes of the two Democratic commissioners is to up the ante on concessions. Sirius CEO Mel Karmazin has indicated that he would only go so far before terminating the deal himself.

Martin issued a statement, saying “I am recommending that with the voluntary commitments they've offered, on balance, this transaction would be in the public interest.”

The NAB issued a terse response to the news. NAB Executive Vice President Dennis Wharton said, "Given their systematic breaking of virtually every rule set forth by the FCC in their 11 years of existence, it would be curious if the Commission now rewards XM and Sirius with a monopoly."

RBR/TVBR observation: Illustrating what will likely happen with the Dems at the FCC is what has already taken place across the Mall on Capitol Hill. One early supporter of the merger, Bobby Rush (D-IL), withdrew his support recently on hearing that the minority set-aside would only amount to 4% of capacity, noting that the percentage falls far short of the total minority population in the US.

That will likely leave XM/Sirius counting on the votes of the two Republican commissioners. Tennessee Association of Broadcasters President Whit Adamson recently wrote an OpEd piece hoping that fellow Tennessean Deborah Taylor Tate would support broadcasters and turn down the merger, but it remains to be seen if she will honor that request.

The most common result for a politically-divisive issue at the FCC’s HQ in the Portals is a three-two victory for the party in power. We would put the odds in favor of approval by that margin.

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