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The New York, subscription-based satellite radio firm Sirius Satellite is very close to getting the approval from the Federal Communications Commission (FCC) to purchase rival Washington D.C.-based XM Satellite Radio.
The merger of the two companies would end an 18-month government review of the deal that would first of all create a monopoly in the satellite radio market.
Federal Communications Commissioner Deborah Taylor Tate told reporters on Wednesday that she was ready to give her vote in favor of the merger. Her vote would break a deadlock along party lines among the other four commissioners. Another FCC member who publicly said that he will support the deal, but with certain conditions, is chairman Kevin J. Martin. He proposed that the two companies should fulfill some minor conditions to get the approval: price caps, more minority programming and a la carte channel offering.
On the other side there was Jonathan S. Adelstein, a Democratic F.C.C. commissioner, who voted against the merger on Wednesday. He argued that it wouldn’t be in the public interest to approve the merger between the only two companies in a particular business.
According to sources close to the commission, Tate pressured the agency to fine Sirius and XM for not fulfilling an obligation that came with their licenses in 1997, offering interoperable technology to their users.
The Federal Communications Commission is the last regulatory hurdle to the $3.9 billion takeover, and a 2-2 deadlock left the deal in Tate's hands. FCC Republican members Chairman Kevin Martin and Robert McDowell voted in favor of the deal, while Democrats Michael Copps and Jonathan Adelstein voted against it.
By merging, the two firms will save costs that normally are passed onto consumers. However, when it comes to competition, the satellite radio firms are facing enough competition as it is coming from their traditional AM/FM radio, internet-based radio stations and programming delivered by MP3 players such as iPods.
By merging, XM Satellite, with its nearly 8.6 million subscribers and Sirius, with its 7.7 million subscribers, might be able to cut costs and streamlining operations, thus helping them to turn to profit.
Sirius climbed 30 cents, or 13 percent, to $2.68 at 4 p.m. New York time in Nasdaq Stock Market trading and fell 12 percent this year. XM gained 94 cents, or 10 percent, to $10.04 and is down 18 percent.
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