Agreement reached for FCC to clear XM-Sirius deal
WASHINGTON (Reuters) - U.S. regulators reached an agreement to conditionally approve Sirius Satellite Radio Inc's (SIRI.O) purchase of XM Satellite Radio Holdings Inc XMSR.O as the companies said they would pay millions of dollars to settle allegations of past rule violations.
The three Republicans on the five-member Federal Communications Commission have agreed in principle to vote in favor of letting the deal proceed as long as the companies agree to conditions to protect consumers and settle the FCC enforcement matters, a source familiar with the agency review said on Thursday.
"I think it's fair to say an agreement in principle has been reached," FCC Chairman Kevin Martin was quoted by the Wall Street Journal as saying.
The agreement would allow XM and Sirius to clear the final hurdle in a regulatory marathon that began after the merger was first announced in February 2007. Antitrust authorities at the U.S. Justice Department gave their approval in March.
A major obstacle was removed earlier on Thursday when XM and Sirius said they expected to pay a total of about $19 million to settle FCC compliance issues involving certain radios that include FM transmitters and terrestrial repeater stations.
Martin told Reuters progress toward resolution of the alleged violations was a major step toward getting the deal approved.
"I'm optimistic and hopeful that we will be able to move forward very quickly," Martin told Reuters.
Analysts at Stifel Nicolaus said in a research note that the negotiating and drafting of the agreement were "ongoing." They said FCC approval could be wrapped up later on Thursday or "more likely Friday, but in any event, a matter of days."
The merger would bring entertainers such as Oprah Winfrey and shock jock Howard Stern under the same banner. It has been criticized as anti-competitive by the traditional radio industry, and by some U.S. lawmakers.
XM and Sirius said that as part of a possible consent decree, they expected to make voluntary contributions to the U.S. Treasury of about $17 million and $2 million, respectively.
The companies said they also expect to take steps to make sure their ground-based transmitters are brought into compliance with FCC rules. Critics have complained that some of the transmitters have exceeded allowable signal strengths.
The agreement reached among the three Republican commissioners is a modified version of a proposal Martin made in June, which would requires XM and Sirius to cap prices for three years, offer programming on an "a la carte" basis, and make radio channels available for noncommercial and minority programming. The companies also will have to make available to consumers radios that receive both Sirius and XM.
The FCC's two Democratic commissioners voted against the deal. They have cautioned against allowing further consolidation of the U.S. media and said the concessions sought by Martin were not strong enough to protect consumers and preserve competition. However, a 2-2 logjam over the deal was broken on Wednesday after Martin reached a compromise with the final commissioner to vote on the deal, Republican Deborah Taylor Tate, to get her support for the deal.
Sirius shares closed down 9.7 percent at $2.42 in trading on the Nasdaq. XM shares were down 3.39 percent at $9.70.
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