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Tuesday, June 24, 2008

Congressional Black Caucus Examining XM-Sirius Merger

The Congressional Black Caucus (CBC) wants more minority programming included in any merger between XM Satellite Radio and Sirius Satellite Radio. The companies are voluntarily offering 4 percent of their radio spectrum, or 12 channels, for minority and women programming as an enticement for the CBC to support the merger pending before the Federal Communications Commission (FCC). The CBC wants a 20 percent set-aside or 60 channels for minorities and women.

XM-Sirius believes the 20 percent figure would financially threaten the viability of the merger (can't make as much money with minority programming). The FCC is not crazy about the merger because they believe it is not necessarily in the public interest and could represent a monopoly, effectively keeping any other companies out of the satellite radio business. Both companies believe they have a better chance of surviving and prospering by partnering because of competition from all kinds of new technological innovations.

The merger plan was announced about a year and a half ago and was approved by the Justice Department in March. The merger still needs FCC approval. Unfortunately, when the FCC distributed licenses to XM and Sirius in 1997, it was on the condition that the two companies would never combine. Sirius, based in New York has 8.6 million subscribers. Washington, DC based XM hs 9.3 million.

The companies have promised that consumers will not have to buy all of the channels as they currently do and may instead choose tiered pricing. A barebones plan of 50 XM or 50 Sirius Channels might go for $6.99 a month. An a-la-carte option of 100 channels would allow mixin both services for $14.99 a month A full line up would go for $16.99 a month. (The Washington Post 6/17/08, The Wall Street Journal 6/17/08))
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