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Sirius-XM Deal Stirs Debate

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WASHINGTON Opponents and supporters of the proposed Sirius-XM deal that would shrink the satellite radio universe to one provider laid their pros and cons before the FCC on Monday.

The groups—ranging from the National Association of Broadcasters to Women Involved in Farm Economics—gave the commission an earful as the deadline for comments in the merger expired.

In its petition to deny the merger permission, NAB contends that the deal would harm consumers by creating a government-sanctioned monopoly.

"The proposed merger would create a monopoly in the national satellite [radio] market, which would inevitably result in increased prices, fewer programming choices, less local programming for radio listeners and other public interest harms," NAB said. "[Sirius and XM], however, have not even come close to meeting their burden of demonstrating by a preponderance of the evidence that there are 'extraordinarily large, cognizable and nonspeculative efficiencies that justify the creation of a monopoly."

NAB was backed by public-interest groups with which it has usually feuded.

The Consumer Federation of America, Consumers Union, Common Cause and Free Press asked the FCC to reject the companies' proposal to define the market to include all forms of one- and two-way communications services.

"Approval of a merger based on an overly broad definition of the market is likely to result in rising prices, denial of choice, declining quality and slowing innovations," CFA research director Mark Cooper said.

How the FCC defines the market is a critical question. If the commission buys the companies' argument that the market ranges from traditional radio to the Internet, then merger approval is easier. If, on the other hand, it defines the market as just satellite radio, then a merger analysis that recommends approval is much more difficult.

"The merger of XM and Sirius satellite radio can only be called one thing—a monopoly—leaving no choice or competition in the satellite market," Consumers Union vp Gene Kimmelman said.

Broadcasters weren't the only ones with grass-roots support. A coalition of groups including the NAACP, Americans for Tax Reform, the League of United Latin American Citizens and Women Involved in Farm Economics filed comments supporting the deal.

Minority groups and rural dwellers believe that the merger will strengthen niche programming, lower prices and give them more control over what they hear.

Sirius CEO Mel Karmazin touted the groups' support.

"The support for our merger is as diverse as the programming we provide," Karmazin said. "The thousands of pro-merger comments from organizations representing diverse populations and interests, individuals, businesses and experts plainly demonstrate that the combination of Sirius and XM is in the public interest."

XM chairman Gary Parsons said that the filings demonstrate what the companies have been telling policymakers at the FCC, the Justice Department and Congress.

"These FCC comments strongly validate our contention that the merger will produce substantial public interest benefits," he said. "These include greater programming choices, better prices, rigorous competition and more rapid innovation."

In telecommunications matters, a pair of agencies must approve the merger. In this case, the Justice Department examines the deal for its effect on competition, while the FCC decides if it is in the public interest. In its notice of proposed rule making, the commission also said it would look into the deal's public-interest ramifications at the same time it takes up the question of dual licenses.

If approved, the combined value of the company would be about $13 billion, which includes net debt of about $1.6 billion. The combined company would have about 14 million subscribers.