Talks heat up over FCC review of XM-Sirius deal

By Peter Kaplan

WASHINGTON (Reuters) - The U.S. regulatory review of Sirius Satellite Radio Inc's proposed acquisition of XM Satellite Radio Holdings Inc heated up as a key official offered to support the deal in exchange for more concessions from the companies.

Talks intensified in recent days between the two satellite radio companies and Federal Communications Commission officials, with Democratic FCC Commissioner Jonathan Adelstein telling Sirius he would provide a potentially decisive approval vote if the companies met a stringent set of conditions designed to protect consumers and preserve competition.

"It's really serious, full-time discussion--fast and furious," one FCC source said on Friday.

A spokesman for Adelstein confirmed trade press reports that he had spoken with Sirius officials by telephone and laid out conditions for his support that go beyond those that FCC Chairman Kevin Martin has already proposed the agency impose on the companies.

Martin has proposed that the five-member commission approve the deal as long as the companies make available to consumers radios that receive both Sirius and XM, cap prices for three years, offer programming on an "a la carte" basis, and make 24 radio channels available for noncommercial and minority programming, among other things.

Under Adelstein's proposal, the price caps would be extended to six years, the number of set-aside channels would be increased to 25 percent of the companies' total capacity, and any new satellite radio receivers on the market that were subsidized by XM and Sirius would have to be built with technology enabling them to also receive high-definition terrestrial radio signals.

In addition, the companies would have to disclose technical specifications that would enable independent manufacturers to make and sell satellite radios, and they would be barred from passing on increases in programming costs to customers.

Adelstein's offer, which has been circulated among the other four FCC commissioners, complicates an already fuzzy picture over the review. At least three of the five commissioners will have to coalesce around a set of regulatory conditions in order for the deal to win approval.