The FCC has released a Public Notice announcing its approval of the XM and Sirius satellite radio merger. The public notice is only two pages long, with a four page appendix providing very brief summaries of the conditions imposed on the two companies which a majority of the Commissioners found sufficient to protect consumers from harm from the merged entity. The full text of the decision, providing the full reasoning of the Commission on its approval, has not yet been released. Until it is, the impact for broadcast ownership and the treatment of broadcast consolidation set by the precedent of this decision remains unclear.

The conditions placed on the merger and outlined by the decision include some surprising ones beneficial to broadcasters, including that the merged company not use its terrestrial repeaters to originate local broadcasts and that the company not enter into exclusive agreements precluding the broadcast of local sporting events by over-the-air broadcast stations. The decision also imposed price caps on the service for three years, and set out conditions to open the manufacturing of satellite radio receivers to more companies and prohibiting any restriction on combining the radio receiver with other audio devices including digital radio receivers. No condition requiring that satellite radio receivers be capable of picking up over-the-air digital radio ("HD Radio") was imposed, though the FCC promised to issue a Notice of Inquiry to review that issue. Specific programming channels will be made available for noncommercial educational use and for leased access. The FCC also made clear that satellite radio will be subject to the FCC's EEO rules.

Another interesting issue that apparently figured into the decision was a commitment of the companies not to use program tiers that they promise to create to reduce the music royalties that they pay to SoundExchange to compensate artists and labels for the use of their music. This decision was apparently insisted on by Commissioner Tate, according to her statement released last Friday. We wrote about the Copyright Royalty Board decision on satellite radio royalties here. While that decision was based on a percentage of revenue of the service, specific exemptions were included in the decision for revenues specifically attributable to categories of programming that made only incidental uses of music. Perhaps the record companies feared that the satellite companies would set up tiers that would exclude music programming. But why that issue should be part of an FCC decision-making process is unclear, when there is another agency, the Copyright Royalty Board, to review such issues.

In any event, the decision is out, and the larger impact of the decision will be seen when the full text is released.

David Oxenford

David Oxenford is a partner in the Washington, DC office of the law firm of Davis Wright Tremaine LLP. This post originally appeared on DWT's Broadcast Law Blog, and is posted on DMW with the author’s permission. This information is provided for educational purposes only and should not be relied on as legal advice, and should not substitute for competent legal advice from your own attorney.

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