If XM, Sirius Pursue Merger, Hurdles at FCC, Justice Loom

IF XM, SIRIUS PURSUE MERGER, HURDLES AT FCC, JUSTICE LOOM
[SOURCE: Wall Street Journal, AUTHOR: Sarah McBride sarah.mcbride@wsj.com and Amy Schatz]
With speculation on the upswing about a possible merger between satellite-radio rivals Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., the companies face a serious obstacle: Federal Communications Commission regulations that appear to specifically forbid a merger. Winning approval for any deal, from both the FCC and the Justice Department, may rest in persuading regulators that the two companies face many more competitors than just each other. Competing technologies that have helped damp satellite radio's growth -- like iPods, podcasts and Internet radio -- may give the companies ammunition to persuade regulators that a merger of the only two satellite-radio players isn't a threat to competition. An XM-Sirius merger is gaining more urgency in the industry as both companies struggle to win consumers. While both firms add new listeners each quarter, neither is reaching the lofty subscriber levels that were expected a few years ago. FCC Chairman Kevin Martin hasn't said how he might view a deal, but he could be leaning toward a stricter definition of competition in the satellite-radio arena. When asked about a potential XM-Sirius deal last week at the Consumer Electronics Show in Las Vegas, Mr. Martin pointed to how the agency viewed competition in the satellite-television market during its review of EchoStar Communications Corp. and DirecTV Group Inc.'s failed merger attempt a few years ago. In that case, the FCC took a narrow approach to defining the market for video competition. Chairman Martin's support for a deal would be critical to its success. The political climate at the Republican-controlled commission has been more strained than usual since Democrats took control of Congress, and it isn't clear that the five-member commission's two Democrats could be persuaded to support a further consolidation of the market, given their staunch opposition to relaxing media-ownership rules.
http://online.wsj.com/article/SB116899806305378365.html?mod=todays_us_pa...
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