Satellite Radio Merger Touches Hot Policy Buttons

Published September 1, 2007

In an effort to defuse opposition to their proposed merger, XM and Sirius said they would offer a la carte programming selections, including a “family tier” of channels, once the merger is completed.

Both services offer more than 100 channels of news, sports, music, and talk, some aimed at adult audiences. The proposed deal would bring both services together under the XM brand.

Although satellite radio had drawn 12.2 million subscribers as of year-end 2006, according to industry estimates, that still represents a small portion of American radio listenership. Both Sirius and XM have seen sluggish performance on Wall Street.

Nonetheless, the merger has become part of the larger debates over content censorship and media ownership concentration. The U.S. Department of Justice, Federal Trade Commission, and Federal Communications Commission all have authority to review the deal. FCC’s deadline for comments and replies was late July. AM and Sirius used the comment period to propose their a la carte plan.

The National Association of Broadcasters, which largely represents local over-the-air broadcasters, has expressed opposition to the proposed deal as “anti-consumer.” Sirius and XM have urged antitrust regulators to look at satellite radio not as a separate market sector, but instead as one of the many consumer audio entertainment options that today include traditional AM and FM radio, Internet radio, and downloadable music.

Frank Barbetta