WASHINGTON (Reuters) - As the Federal Communications Commission considers whether to allow the two U.S. satellite radio companies to combine in a controversial deal, all eyes are on FCC Commissioner Deborah Taylor Tate.
Tate, one of three Republican commissioners on the FCC, has emerged as the swing vote as the five-member commission weighs a proposal that would let Sirius Satellite Radio Inc (SIRI.O) acquire arch-rival XM Satellite Radio Holdings Inc XMSR.O.
“She’d rather not be the tie-breaking vote, but I think however you slice it, she is,” said one source closely following the FCC review of the deal worth $2.8 billion at Monday’s closing stock prices.
The FCC decision is the final hurdle in a regulatory marathon for the deal that was first announced in February 2007. Antitrust authorities at the U.S. Justice Department approved the merger in March this year after concluding it would not harm consumers.
Two weeks ago, FCC Chairman Kevin Martin proposed that the agency approve the deal after Sirius and XM agreed to abide by conditions to protect consumers and preserve competition.
Among other things, the companies promised to make 24 radio channels available for noncommercial and minority programming, according to FCC sources. In addition, the companies pledged to cap prices, make interoperable radios available to consumers and offer programming on an “a la carte” basis.
Martin’s other Republican colleague, Robert McDowell, is expected to vote in favor of the deal. Both Democratic commissioners are still skeptical, according to sources within the FCC.
That leaves Tate, whose term expires later this year, as the decisive vote. She could use that power to push for additional enforcement provisions to the deal to ensure that Sirius and XM follow through on their promises, the sources said.
A spokesman for Tate declined to comment on the XM-Sirius matter.
Tate has met with both supporters and opponents of the Sirius-XM deal in recent days but has not yet decided whether to support Martin’s proposal, sources familiar with her thinking said.
These sources say they believe Tate has reservations about the proposal, in part because of some past actions by the companies that have drawn criticism.
“I think she has legitimate concerns about some of the companies’ past behavior,” said Gigi Sohn, president of the nonprofit advocacy group Public Knowledge.
Among the issues raised by critics of the deal is that the companies have never offered a receiver that would allow customers to easily switch back and forth between the two services.
The FCC sought to promote the idea when it originally granted the companies their licenses, requiring them to come up with a design for an interoperable radio.
Neither Sirius nor XM ever offered an interoperable radio, although the companies have said they fulfilled their obligation to the FCC by developing the design.
Further criticism has come from broadcasting companies, who want the government to block the deal. They accuse Sirius and XM of putting signal “repeaters” — towers with equipment used to enhance their signal — in places where they are prohibited.
Tate, a former Tennessee utility regulator and adviser to two state governors, has reached no conclusions about how she will vote. “I wouldn’t be putting money on either side,” according to a source with knowledge of her deliberations.
Throughout most of her two-and-a-half year tenure at the agency, Tate has been a reliable ally for Martin, voting with the chairman the vast majority of the time.
Of late, though, Tate has shown a willingness to split from the chairman. In November, she joined other commissioners in refusing to go along with a proposal by Martin that would have allowed broader regulations on the U.S. cable industry.
More recently, Tate joined with other commissioners to reject Martin’s proposal on a dispute over marketing rules applying to cable operators and phone carriers.
But some observers of the commission doubt Tate would vote against the Sirius-XM deal outright, noting that she has never voted against both her fellow Republican commissioners.
“She’s voted to the right of Martin, but she has never voted with the Democrats to the left of Martin,” said one person following the decision who declined to be named.
Editing by Tim Dobbyn