XM, Sirius Start FCC Merger Paperwork, Licensing Questions Remain

Prospective newlyweds Sirius Satellite Radio and XM Satellite Radio have now filed initial licensing paperwork with the Federal Communications Commission (FCC), another early chapter in a drawn-out process.

The paperwork requests the transition of current, individual broadcasting licenses into a jointly-held entity.  That is currently not allowed by the FCC, though the companies are hoping to modify existing statutes.  In the joint filing, the companies stressed that the combination would advance the public interest, a critical litmus test for FCC officials.  “The proposed merger of Sirius and XM will generate substantial, merger-specific benefits,” the filing asserted.  Post-merger pricing specifics have been the source of heavy scrutiny from Congressional lawmakers, many of whom are concerned that that satellite monopoly will unfairly elevate current subscription pricing.  “We must view these claims with a healthy degree of skepticism,” Senator Herb Kohl (D-Wis) said during Congressional testimony this week.

The filing only partially allays those concerns by outlining a broader range of pricing possibilities.  “The efficiencies resulting from the merger will allow the combined company to provide consumers programming choices on a more a-la-carte basis at lower prices,” the filing states.  That includes cheaper subscription costs for more scaled-down offerings, but more expensive costs for packages that include premium content.  “After the merger, customers may elect to receive fewer channels at a monthly price lower than $12.95; substantially similar programming at the existing $12.95 price; or more channels, including some of the “best of both” networks, at a modest premium to the cost of one service, and considerably less than the cost of subscribing to both services.”  Meanwhile, the pair attempted to broaden the market definition beyond satellite radio by pointing to heavy entertainment competition from terrestrial and internet formats.