# XM-Sirius Merger down to 1 vote



## Pete K. (Apr 23, 2002)

Rapid City's pride and joy, Jonathan Adelstein has withdrawn his "generous" conditions and voted no on the XM-Sirius merger. That leaves Deborah Tate as the lynchpin.


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## syphix (Jun 23, 2004)

Orbitcast has an interesting point...



> Interestingly, Adelstein may have hinted towards the direction that Commissioner Tate is leaning, when he released this statement today:
> 
> "...it appears they're going to get a monopoly with window dressing."
> 
> Adelstein seems to be speaking as if approval is inevitable.


Hmmm.....


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## tcusta00 (Dec 31, 2007)

syphix said:


> Orbitcast has an interesting point...
> 
> Hmmm.....


Kind of a lame line: "A monopoly with window dressing." What's that supposed to mean?


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## syphix (Jun 23, 2004)

More fuel to the rumor mill fire...
http://www.reuters.com/article/marketsNews/idUSN2341638620080723


> FCC Chairman Kevin Martin is near an agreement to get the support of fellow Republican commissioner Deborah Taylor Tate, which would give him the three votes needed for approval of the deal on the five-member commission...


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## syphix (Jun 23, 2004)

"Tentative deal" made:
http://www.cnbc.com/id/25819198


> The Federal Communications Commission is close to giving a green light to Sirius Satellite Radio's proposed takeover of acquisition of XM Satellite Radio, the Wall Street Journal reported Wednesday.
> 
> With two Democratic FCC commissioners opposed to the deal and two Republican commissioners in favor, the fifth vote from previously undecided Republican Deborah Taylor Tate appears set to go in favor of the merger, the newspaper said.
> 
> The vote could come as early as today. The two companies will pay about $20 million in fines in order to get the approval, the Journal said.


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## Stewpidity (Jan 26, 2008)

I cannot believe this has taken this long...pure bureaucratic BS...


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## Pete K. (Apr 23, 2002)

The deal is done, or so says the WSJ. Only 491 days but heck who's counting?


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## cforrest (Jan 20, 2007)

http://online.wsj.com/article/SB121683130281477651.html Subscription may be required, below is an excerpt of the article.

FCC Reaches Tentative Deal 
To Approve XM-Sirius Merger

By AMY SCHATZ
July 23, 2008 4:14 p.m.

A tentative deal has been reached by a majority of commissioners at the Federal Communications Commission to approve the merger of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., a FCC source close to the review said Wednesday.

Republican commissioner Deborah Taylor Tate is the only FCC member left to vote on the deal and she is expected to do so shortly, two FCC officials close to the negotiations said. She is expected to sign off on the deal in exchange for a consent decree that resolves several enforcement issues involving the satellite radio companies and a combined fine of about $20 million, an FCC source close to the deal said.

Ms. Tate has also asked for a variety of other minor conditions, an FCC source said. An adviser to Ms. Tate did not respond to a call for comment. Exact details about the deal are not known since FCC officials and lawyers for the companies appear to still be working them out.


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## djlong (Jul 8, 2002)

FCC: "You're both losing money and want to merge to try to survive. In exchange for having followed all the rules, we're going to make you lose another $20M in order to get what you want - and we're going to call it a fine because 'blackmail' or 'extortion' or 'bribery' sounds so icky."


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## Tom Robertson (Nov 15, 2005)

My only thought about the fine is that they both were to produce receivers that could be used on both systems and did not. Perhaps there were a few other things they were supposed to do (or not do?)

Cheers,
Tom


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## deadrody (Apr 2, 2007)

Tom Robertson said:


> My only thought about the fine is that they both were to produce receivers that could be used on both systems and did not. Perhaps there were a few other things they were supposed to do (or not do?)
> 
> Cheers,
> Tom


They would make their radios interoperable *IF* they were allowed to merge, not before. Why on earth would two competing companies make their equipment work together ?

No, the $20 M is ludicrous. This proceeding has allegedly taken this long to "protect consumers" and then they slap a huge fine on them that they will just pass along to their customers. BRILLIANT!!!


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## bigbenny13 (Jul 22, 2007)

This whole saga makes me feel like my head could explode. The Justice department takes 13 months and says no monopoly. Then the FCC tries to put unprecedented moronic stipulations like giving up 25% of its bandwidth to competitors, forcing HDradio tuners into sat tuners, a 20 million dollar fine for doing nothing wrong(huh!), and a bunch of other anti-competitive stipulations. The NAB were clearly trying to delay this deal so that the sat companies would be dead or crippled if it ever did get approved. I hope the new company sues the crap out of the FCC and NAB for ant-competitive, hostile business practices, bribing elected officials, anything so that bureaucrats get there comeuppance.


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## harsh (Jun 15, 2003)

deadrody said:


> They would make their radios interoperable *IF* they were allowed to merge, not before.


Receiver interoperability is part of the conditions of a Digital Audio Radio Service (DARS) license and has been from the beginning. FCC rules state that each and every DARS operator must "certify that its satellite DARS system include a receiver that will permit end users to access all licensed satellite DARS systems that are operational or under construction."

When someone pressed the issue, Sirius and XM got together and on October 6, 2000, filed a joint submission with the FCC that they were working on a solution. I think that's pretty much where it died.

Now that the merger appears to be a done deal, the losers in the battle (Clear Channel et al) want their pound of flesh.


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## harsh (Jun 15, 2003)

Stewpidity said:


> I cannot believe this has taken this long...pure bureaucratic BS...


Make no mistake: this is politics at its peak of ripeness.


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## Tom Robertson (Nov 15, 2005)

deadrody said:


> They would make their radios interoperable *IF* they were allowed to merge, not before. Why on earth would two competing companies make their equipment work together ?
> 
> No, the $20 M is ludicrous. This proceeding has allegedly taken this long to "protect consumers" and then they slap a huge fine on them that they will just pass along to their customers. BRILLIANT!!!


As harsh said, they would because they were required to by law.

Perhaps some of why they both are on hard times is general consumer electronics manufacturers couldn't make standard AV equipment and car radios that supported both.

Harsh, thanks for the details. I knew they were required, but not the specifics.

Cheers,
Tom


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## syphix (Jun 23, 2004)

First, Jim Cramer's take:
http://www.cnbc.com/id/25818037

Second, this $20M fine is 36 TIMES the fine that CBS got for showing a boob on primetime TV (which, yes, got overturned in courts...something I agree with). Which seemed to upset more people and do more "harm" than XM/SIRIUS' violations. Doesn't that seem a _bit_ excessive??


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## Tom Robertson (Nov 15, 2005)

harsh said:


> Make no mistake: this is politics at its peak of ripeness.


Yeah, I have to close this thread as it so riddled with politics... (J/K) 

Actually, you all have done a great job steering clear of the politics aspects. Thanks! That helps us moderators.

Cheers,
Tom


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## harsh (Jun 15, 2003)

syphix said:


> Doesn't that seem a _bit_ excessive??


Depends on how you feel about someone lying on their application for a license to "serve the public good".

Interoperability seems like an awfully good idea that benefits the consumer and keeps the provider on their toes as far as remaining competitive.


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## Richard King (Mar 25, 2002)

My understanding of the fine is that it is related to their terrestrial links being above the FCC approved limits. I agree that $20 million is simply extortion.


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## Herdfan (Mar 18, 2006)

Tom Robertson said:


> Perhaps some of why they both are on hard times is general consumer electronics manufacturers couldn't make standard AV equipment and car radios that supported both.


I thought they made it, just never actually sold it.:lol:


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## Marvin (Sep 14, 2003)

syphix said:


> First, Jim Cramer's take:
> http://www.cnbc.com/id/25818037
> 
> Second, this $20M fine is 36 TIMES the fine that CBS got for showing a boob on primetime TV (which, yes, got overturned in courts...something I agree with). Which seemed to upset more people and do more "harm" than XM/SIRIUS' violations. Doesn't that seem a _bit_ excessive??


CBS ended up just the other day not having to pay any of the fine for that as well. That only took 5 years.


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## trh (Nov 3, 2007)

harsh said:


> Receiver interoperability is part of the conditions of a Digital Audio Radio Service (DARS) license and has been from the beginning. FCC rules state that each and every DARS operator must "certify that its satellite DARS system include a receiver that will permit end users to access all licensed satellite DARS systems that are operational or under construction."
> 
> When someone pressed the issue, Sirius and XM got together and on October 6, 2000, filed a joint submission with the FCC that they were working on a solution. I think that's pretty much where it died.


In an interview with USA Today last year, Mel Karmazin, CEO of Sirius said this:

*Q: You've been working since 2000 on a radio that can receive both XM and Sirius signals. When will that be completed?*
_A: We have one. It's in my office. &#8230; At this point, there is no market for it because nobody is subsidizing the cost of the (dual) radio. Today what Sirius does is that we subsidize (our) receiver. And the reason we subsidize it is because we're gonna get a subscription. So, we think with the merger this really represents an opportunity for us to be able to financially subsidize radios that provide for interoperability._

USA Today Article


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## Ken S (Feb 13, 2007)

Isn't the fine partially based on their FM Transmitter strength being well over what was allowed. I know both companies got nailed and had to stop selling radios for awhile while they re-did the FM transmitters.


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## trh (Nov 3, 2007)

Ken S said:


> Isn't the fine partially based on their FM Transmitter strength being well over what was allowed.


A Reuter's article has this paragraph: _"The FCC rule violations, to be resolved with the $20 million fine, stem from allegations that XM and Sirius exceeded allowable strength of some of their ground-based transmitters and failed to follow through on a pledge to make interoperable radios available to customers."_

XM & Sirius have argued that the 1997 FCC Order didn't require they actually make interoperable radios -- it only said they had to *design* one. The order stated that they "are required to design a receiver which would accommodate all satellite DARS providers." The NAB has maintained that the intent of the FCC was that XM & Sirius would produce/market such a receiver.

96 pages of jibber-jabber if you're so inclined. 1997 FCC Order


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## harsh (Jun 15, 2003)

In reading through the interoperability sections, it is obvious that the FCC thought that these interoperable receivers were going to see the light of day sooner than never.

Section 106 (the one I quoted) describes the situation a little bit differently than section 103 (the one trh quoted). In my estimation, the FCC used the wrong terminology in their order. If they had demanded a interoperable "tuner" instead of "receiver", Sirius wouldn't have been able to do a one-off. I'm inclined to believe that the Sirius "interoperable" unit may have two tuners in it.

It seems to me that Sirius will appeal the fines and they will be thrown out because of this terminology issue.


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## harsh (Jun 15, 2003)

Ken S said:


> Isn't the fine partially based on their FM Transmitter strength being well over what was allowed.


Nope. That resulted in a slap on the wrist and having to swear the future units would be within spec.


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## syphix (Jun 23, 2004)

NAB's statement on the assumed FCC approval...sounds like an appeal is already in the works:
http://www.nab.org/AM/Template.cfm?...MPLATE=/CM/ContentDisplay.cfm&CONTENTID=12784



> "This sweetheart deal for Wall Street speculators is premised on a promise that a monopoly will provide consumers with lower prices, better service and more programming formats. Only members of the Flat Earth Society would buy into such specious nonsense.
> 
> "Just six years ago, the FCC denied a monopoly to the nation's only two satellite TV companies in a 5-0 vote. Yet today, the Commission is apparently preparing to grant a monopoly to the nation's only two satellite radio companies that in their 11 years of existence have had more luck flaunting the FCC's own rules than creating a successful business model.
> 
> "Historians will view this satellite radio giveaway as an irrational departure from 118 years of antitrust law wisely founded on the unassailable reality that competition serves consumers better than monopolies. NAB thanks Commissioners Copps and Adelstein -- along with consumer groups, 80 bipartisan members of Congress, and scores of labor, minority and antitrust organizations -- who stood against this wrongheaded monopoly. *Given such overwhelming opposition, we're not convinced the final chapter of this book has been written.*"


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## wilbur_the_goose (Aug 16, 2006)

Bigbenny13 - Too bad you can't sue the US Government without a private bill passed by Congress!


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## syphix (Jun 23, 2004)

WSJ.com:


> A majority of commissioners at the Federal Communications Commission have reached a deal to approve Sirius Satellite Radio Inc.'s long-pending purchase of XM Satellite Radio Holdings Inc.
> 
> The final hold-out, Republican commissioner Deborah Taylor Tate, agreed to vote to approve the deal after winning several concessions from the companies involving enforcement issues.
> 
> ...


(subscription needed for the full story)


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## iotp (Aug 13, 2007)

As far as "dual" radios..

My guess is that a revamp of channels will happen.

My guess also is that "tiered" subscriptions are on their way too. 

That wont make people happy, paying for a subscription for radio is an ok thing. 

From a discount, I recently paid $77/year for my XM on my new Honda with built in XM, even at the $12/month rate. 

To get people to pay upwards of $20/mo I think just wont happen.

People are paying absorbanant rates for high speed internet, cable or satellite tv, and to through another $20-30/mo on radio?

Not gonna happen here. Thats for sure.


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## syphix (Jun 23, 2004)

harsh said:


> Nope. That resulted in a slap on the wrist and having to swear the future units would be within spec.


Wrong: part of the "fine" is because of over powered FM transmitters on the radios:
http://online.wsj.com/article/SB121683130281477651.html?mod=hpp_us_whats_news


> For the companies, the deal will come at a steep price. They are expected to enter into a consent decree, with XM paying about $17.5 million and Sirius paying about $2 million, *to settle complaints they produced satellite radio transmitters that exceeded FCC power limits* and placed booster towers in unapproved locations.


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## tiger2005 (Sep 23, 2006)

The fact that the NAB is even involved in this makes me sick. Gotta love the US Government! That should have proven from the very beginning that satellite radio has major competition outside of the two sat radio providers.

Essentially, satellite radio's competition is against a FREE product in terrestrial radio, and MP3 players. The fact this whole thing took so long to figure out is ridiculous to me. Its not at ALL the same as when DirecTV and Echostar tried to merge. People in the middle of nowhere with no access to a cable line would've been screwed. Terrestrial radio has a FAR deeper penetration in this country than OTA TV signals, so the NAB's argument is pure crap.


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## syphix (Jun 23, 2004)

Oh, but tiger2005...the NAB was fighting for the _consumer_!! 

They shot themselves in the foot...if they really feared that a monopoly would not serve the consumer and raise rates, why didn't they just shut up, wait for the merger to happen, watch them raise rates, and see all the subscribers abandon XM/SIRIUS to listen to AM/FM??

Answer?

BECAUSE IT WAS *NEVER* ABOUT THE "CONSUMER".


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## Frrrunkis! (Mar 3, 2008)

iotp said:


> As far as "dual" radios..
> 
> My guess is that a revamp of channels will happen.


That's an interesting situation post merger. Mel has stated that you will be able to keep the same service you have now for the same price. You would think that the merged company would be interested in cutting redundant content (most music channels) and just broadcasting the same content to both systems. I would assume they could save alot of cash...I just don't know how feasible that sounds. So technically, it won't be the same service.



iotp said:


> My guess also is that "tiered" subscriptions are on their way too.


Absolutely. It's technically XMSirius' way of raising prices and covering it up by saying it's just a way of providing more options for their subscribers. Sirius customers can pick 50 of the Sirius channels you want for $6.99...if you want Howard, it'll cost you an extra $6/mo. Want sports premiums? That'll be another $5/mo. Probably 70 channels for $16 bucks? No thank you. OR, a Sirius customer can pick 100 Sirius channels and a choice of only 11 best of XM channels for $14.99/mo. 100 channels for $15/mo...not quite, I'd like to stick with my 170 channels for $13/mo. Granted, I probably only listen to 30 channels on the XM platform, I still like having the variety and all of those channels at my fingertips. I'd love to just pick whatever channels I want off of both platforms, but that just doesn't seem possible in this tiered plan. I'll probably just stick with the $12.95/mo XM version and hold onto it as long as I can.



iotp said:


> That wont make people happy, paying for a subscription for radio is an ok thing.
> 
> From a discount, I recently paid $77/year for my XM on my new Honda with built in XM, even at the $12/month rate.
> 
> ...


I've been with XM for about 5 years and I still hear the typical, "How you can justify paying for radio?" It's easy for me...I travel alot and I like the fact that I can stay on the same channel. I also like O&A and hockey. It's perfect for me. But $16+/mo? I might reconsider, or at least cancel a radio or two to try and cut some costs. And even if it includes a bunch of Sirius channels...I don't care, not much interests me over there. I was happy paying $9.99/mo back in the day...$13/mo is silly, but $16+ is ridiculous.


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## pinkertonfloyd (Jun 5, 2002)

Richard King said:


> My understanding of the fine is that it is related to their terrestrial links being above the FCC approved limits. I agree that $20 million is simply extortion.


It really goes to that some of the locations of the towers are not exactly where the licenses say that are... we're not talking by miles, but by feet, and the weird part is that XM (who has by far more repeaters) doesn't own the towers, they're leased by companies, so XM files a license based on the data from the tower owner (who is most likely running cellular, STLs, and even FM/TV on the same tower in many cases), the NAB (and strangely, Sirius) finds out that some of the towers aren't exactly where they should be and files complaints that they're operating outside of their licensed location.

(Most likely the data was off when some of the towers were built before GPS became accurate to within 12 feet, so they basically are within a "ballpark" area (literally) but since they operated for so long at that licensed location, to just keep them that way (rather than re-filing for a TON of licenses... these towers usually have loads of radio equipment on them to make money/cut costs).

The other part is the hot transmitters on the units, which XM to this days says passes FFC regs when tested, just the tests were changed, and that most of the complaints were most likely from the cheap IPOD and 3rd party ebay transmitters.


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## harsh (Jun 15, 2003)

syphix said:


> Wrong: part of the "fine" is because of over powered FM transmitters on the radios:
> http://online.wsj.com/article/SB121683130281477651.html?mod=hpp_us_whats_news


The fines were for hot terrestrial repeaters, not the receivers. You'll note that while Sirius was busted for hot FM transmitters and unauthorized repeaters, their fine was a fraction of XM's for hot repeaters. The WSJ article doesn't discuss the distribution of the fine amounts.



Reuters report said:


> adopt comprehensive compliance plans, and take steps to address any potentially non-compliant radios remaining in the hands of consumers


The penalty in this instance is repairing or replacing the receivers.


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## Herdfan (Mar 18, 2006)

harsh said:


> not the receivers. You'll note that while Sirius was busted for hot FM transmitters


Wasn't that the Howard Stern issue where adjacent cars listening to stations in the lower band ( think religious programming) would all of a sudden have Stern blaring out of the speakers.


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