Karmazin may lose by winning


FCC Chairman Kevin Martin says he’s got staffers working on various options, but there won’t be a Q1 ruling on whether Sirius and XM can merge – and, besides, he wants the Department of Justice (DOJ) to go first.

That is the normal course of action, although it’s not required. The Commission generally waits for a thumbs-up from antitrust regulators before issuing its own verdict on a major merger transaction involving FCC licensees. The fact that Martin said the staff is working on “various options” indicates, though, that the Commission’s decision is not likely to be a simple yes or no. Rather, Martin is looking at which alternatives will command a majority vote of approval from the five commissioners, or perhaps a unanimous vote. And, since he is the chairman, it is unlikely that he is going to allow a vote on any version where he won’t be part of the majority.  

RBR/TVBR observation: We’re thinking Mel Karmazin may lose by winning. If the DOJ approves the satellite radio merger – which is still a very big IF – the approval to follow from the FCC might carry requirements so onerous that XM and Sirius would not be willing to accept them, but would instead head to court. Republican Martin wants a la carte offering, which the companies say is OK with them, but Democrats Michael Copps and Jonathan Adelstein want to maintain some sort of competition in satellite radio. That could mean a requirement that the merged XM-Sirius lease out a large chunk of their spectrum to create a new competitor – and idea that could well scuttle the merger idea. What’s not clear is whether Martin needs either of those votes to get a majority of the five-member commission. Also, it would be a feather in his cap to put together a unanimous vote, so he could hand XM-Sirius a take it or leave it deal that they would find hard to swallow. That would put the ball back in their court – accept terms that they don’t like and move on with the merger, or head to court. Of course, suing the FCC would just keep the merger in limbo indefinitely.