Can it be? Is the Federal Communications Commission finally doing what it should have done several months ago?
The Wall Street Journal reported this morning that FCC Chairman Kevin Martin is urging his regulatory staff to approve the combination of XM Satellite Radio
With the two apparently agreeing to his concessions, the FCC is unlikely to block the merger that will now be beneficial to consumers. The final decision could come in as little as three weeks, pushing the approval into July, a whopping 17 months after the merger was announced.
Give and ye shall concede
What are those concessions, exactly?
They aren't deal breakers.
- Subscription fees will be capped for three years.
- The company will set aside 8% of its channels, to be leased to non-commercial and minority-owned stations.
- Licensing of receivers will widen to include more manufacturers, as well as the introduction of interoperable radios, within a year of the deal's close.
- Eventually, customers will be able to cherry-pick the channels they want through a la carte options.
Let's go over what XM and Sirius are conceding to win the FCC's blessing. Holding rates goes against the perpetual increases you see in cable and satellite television, but it's in the nascent industry's best interest to keep fees low. The companies are struggling as a value proposition in retail channels, with all of their recent growth coming from new car installations. The market is not receptive to higher prices, even if XM and Sirius would love to offer premium programming down the line. Besides, XM and Sirius will be too busy clicking their heels as they count the billions in realized synergies.
Leasing out 8% of its bandwidth is a mixed blessing. It will bring opportunities for minority-minded terrestrial companies like Inner City Broadcasting and Spanish Broadcasting System
Throwing out a wider licensing net would be a good thing. Satellite radio wants as many receivers out there to rake in subscription revenue, and the industry's recent failures at the retail level show that the current product isn't cutting it with consumers.
Letting subscribers opt for lower-priced plans is also a good business move. In fact, this was a concession that XM and Sirius agreed to last summer, ready to offer half-priced plans a year after the deal is completed.
I guess that's why they call it terrestrial
The ironic loser in all of these concessions is the National Association of Broadcasters. Terrestrial radio's lobbying arm has spent money to influence lawmakers and shape public opinion against the merger.
It hasn't worked. More importantly, the concessions that will make satellite radio more attractive to consumers -- like lower prices, broader programming, and more manufacturers cranking out receivers -- will make terrestrial radio even less relevant.
This was going to happen anyway. Terrestrial radio has bigger fish to fry, like automakers installing input jacks for portable media players and music-stocked cell phones, or even Ford
Terrestrial radio's advantage is fresh, local programming, and it's better served promoting that than earmarking lobbying dollars to impede progress elsewhere. If it needs that point hammered home, let it keep plucking the "she loves me not" petals with every concession that XM and Sirius have had to make to get this deal approved.
The FCC is finally coming around to making the right decision. Now let's see the entire radio broadcasting industry follow suit.