By Rick Aristotle Munarriz
July 23, 2008
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And then there was one.
Federal Communications Commission member Jonathan Adelstein voted against the merger between XM Satellite Radio (Nasdaq: XMSR) and Sirius Satellite Radio (Nasdaq: SIRI) this morning, just days after proposing concessions that would have probably suffocated the union anyway.
This now leaves Commissioner Deborah Taylor Tate -- a Republican who's been tight-lipped about her feelings on the controversial deal -- as the deciding swing vote of the five-person regulatory committee.
Sirius and XM have been willing to make concessions since the deal was first announced more than 17 months ago. They beat regulators to the punch by agreeing to offer lower-priced plans last summer. They didn't blink when FCC Chairman Kevin Martin proposed a three-year freeze on rates, and they even accepted demands to hand over some of their channels to public-interest and minority-owned broadcasters.
XM and Sirius realize that deal may defy their roots as rivals, but the world has changed a lot in the past few years. Music subscription services, Internet radio, in-dash hard drives, musical cell phones, and portable music players have all grown in popularity since XM and Sirius won their original licenses. Terrestrial radio operators like Clear Channel (NYSE: CCU) and CBS (NYSE: CBS) may be lobbying hard against the merger, but this is no longer about terrestrial radio fending off nearly 20 million satellite radio subscribers. If XM and Sirius were to disappear, conventional broadcasters would still be beset by consumers armed with new choices in how they listen to music.
Satellite radio should actually be terrestrial radio's ally -- a source of syndicated content, and the medium's greatest ambassador in proving that live radio can still be cool.
It's a pity that Adelstein's proposed concessions -- which would have stifled Sirius and XM's ability to respond to the marketplace, and punished consumers, by removing as much as 25% of the current programming -- were apparently just a negotiating ploy, when he was really just hours away from voting against the deal.
Now, just one person stands between a union that would create billions in synergies over the next few years. One person can end the humiliating hoops through which the XM and Sirius have had to jump over the past six quarters, even as their respective losses mounted.
At least all the tumult will end soon. Then we'll simply have to figure out why it took five people so long to arrive at a simple decision.
More news than static on the Sirius-XM delays:
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