Satellite radio firms to pay $19.7 million for rules violation

WASHINGTON — Approval of a merger of the nation's only two satellite radio companies was imminent Thursday after the pair agreed to pay $19.7 million to settle charges they violated federal rules.

Sirius Satellite Radio Inc.'s proposed $3.6 billion buyout of rival XM Satellite Radio Holdings Inc. has been before the Federal Communications Commission for 16 months.

The five-member commission is deadlocked at 2-2, but Republican Deborah Taylor Tate was expected to cast the deciding vote approving the deal once a consent decree outlining the enforcement action is circulated for a vote.

"This was an issue that Commissioner Tate thought was important for us to deal with prior to her supporting the merger," FCC Chairman Kevin Martin said Thursday. "I think that this was a significant issue that we can take off the table that I think will allow us to move forward soon on finishing up the merger."

Tate had apparently sought a fine of $8 million, according to FCC officials who asked not to be named because the deal was not yet final.

Martin said the agency reached an agreement late Wednesday night where XM will pay $17.5 million and Sirius will pay $2.2 million to resolve interference complaints and violations related to land-based signal repeaters operated by the companies.

Martin said XM's penalty was greater because the company's offense was more egregious. He said that XM had operated more than 300 repeaters that were in violation of FCC rules.

"And even more significantly," Martin said, "XM had continued to operate their repeaters without authority when they were in violation."

The agency was free to pursue the enforcement action against the companies outside of the merger process, but Tate apparently wanted the matter settled before approval. Tate has not responded to requests for comment.

The Justice Department approved the deal in March without conditions, saying the companies don't really compete because customers must buy equipment that is exclusive to either XM or Sirius, and subscribers rarely switch providers.

DOJ also agreed with the companies' argument that they compete with other forms of audio entertainment, including digital radio, Internet-based radio stations and even devices like Apple Inc.'s iPod.