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June 5, 2008

The FCC is expected to soon make a decision about the Sirius Satellite Radio merger with its rival XM Satellite Radio.

FCC CEO Kevin Martin said that he expected the commission to do something soon...

However, Martin defended the long review process by saying that the deal was "extraordinary" and raised some difficult issues.

Martin also added the Federal Communications Commission already had a rule in place that prohibited the merger of the two satellite radio companies as early as November 2007.

The agency's CEO acknowledged that the two companies had made pricing concessions in order to get the deal approved by regulators.

Three months ago, the Justice Department concluded that the deal would not "substantially lessen competition."

The FCC is the final regulatory hurdle the companies need to move the merger forward. The deal, which was valued at $13 billion in February of last year when it was announced, was approved by XM and Sirius shareholders in December 2007.

Originally, the FCC prohibited satellite radio companies from combining or merging together. However, now that rule could be changed, especially as satellite radio faces more competition from Internet music services, music playing phones, and online music stores like Apple's iTunes that allow people to play music on iPods.

In related news, XM and Sirius have "been burning cash" as competition from online video and music sites has grown over the past eighteen months. Critics wonder what's taking the agency so long to decide.

Martin had indicated at the end of March that the agency was inching closer to a decision on whether the deal passes muster. But two months later, the FCC still hasn't announced a decision and now pressure is mounting from XM and Sirius.

Martin also added "I think we are under an obligation, but this is an unusual circumstance... This was unlike any other merger that's come in front of us. We have a rule that would prohibit it from going forward. I think they're asking for something extraordinary, and the commission is taking a look at it. We'll get back to them soon."

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Source: The FCC.