FCC Commissioner Jonathan Adelstein this morning (July 23) voted against the proposed Sirius-XM merger after the satcasters refused to embrace any of the conditions he proposed to win his support for the deal, R&R has confirmed.
"It was clear that the plan was not going to get anywhere -- particularly with the chairman [Kevin Martin]. He was serving as a proxy" and the satcasters would not budge "on anything," said a source familiar with the merger.
In a prepared statement, Adelstein said, "I was hoping to forge a bipartisan solution that would offer consumers more diversity in programming, better price protection, greater choices among innovative devices and real competition with digital radio," Adelstein added, "Instead, it appears they're going to get a monopoly with window dressing. We missed a great opportunity to reach a bipartisan agreement that would have benefited the American people."
The vote on the regulatory body now stands at 2-2, after commissioner Michael Copps rejected the plan earlier this week.
Only Republican member Deborah Taylor Tate remains undecided. Adelstein's vote puts more pressure on Tate, who is seeking resolution of a pending enforcement action against the companies, according to public filings.
Last week, on July 17, Adelstein said he would support the plan to merge with his "yes" vote as long as the two companies agreed to his list of conditions aimed at protecting the consumer against a monopoly. He said he wanted both companies to cap prices for six years, including prohibiting the new company from "any pass-through programming costs that could be added to a satellite radio subscriber's bill," and make a quarter of the total satellite spectrum capacity available for public interest and minority programming, among other conditions. His proposal sought more concessions than the companies offered voluntarily in early June when crafting a plan the resulted in chairman Martin's June 16 plan that included eight conditions toward winning his approval. Many of those points on Martin's plan had already been suggested by Sirius and XM in the early days following their Feb. 19, 2007, proposal to merge operations in a multimillion dollar, all-stock deal.
FCC Commissioner's conditions were designed to "enhance" the ones suggested by Martin, according to a source familiar with the plan's design.
Adelstein wanted the new satellite radio company to make one quarter of its total satellite capacity -- about 75 of 300 channels -- available for public interest and minority programming. That is about three times the amount of spectrum originally found to be acceptable by Martin. Under Adelstein's plan, the combined Sirius-XM entity could retain the portion it already uses for such programming but it would need to lease enough spectrum to another or other operations. In the end, about 10% of that space would be for non-commercial programming and 15% for culturally diverse programming.
The FCC Commissioner wanted to prevent the new satellite entity from dictating the marketplace and insisted that all new satellite radio receivers incorporate HD Radio technology. One highlight of his proposal included no pass-through costs to consumers for six years, which would have meant much tougher negotiations for the satellite company with such costly program players as the National Football League, Major League Baseball, NASCAR and other big subscriber draws that have sent the cost of building a satellite company into the stratosphere.