FCC approves Sirius-XM satellite radio merger

Federal regulators formally approve Sirius Satellite Radio's $3.3 billion buyout of former competitor XM Satellite Radio with conditions.

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The Federal Communications Commission on Friday formally approved Sirius Satellite Radio's $3.3 billion buyout of former competitor XM Satellite Radio with conditions.

FCC commissioners voted 3-2 to approve the merger, which will unite the nation's only two satellite radio providers and allow more than 18 million subscribers to receive programming from both services. Executives say that the merger will lead to huge cost savings and the first profits in the industry.

Republican Commissioner Deborah Taylor Tate cast the tie-breaking vote after the companies agreed to a three-year cap on prices, set aside 8 percent of their channel capacity for minority and noncommercial programming, and agreed to pay $19.7 million for past FCC rule violations. The companies also agreed to bring interoperable radios to the market within a year.

FCC Chairman Kevin Martin confirmed the final vote Friday night.

"The merger is in the public interest and will provide consumers with greater flexibility and choices," Martin said in a statement.

The FCC was the final regulatory hurdle the companies needed to clear to move the merger forward. The deal, which was valued at $13 billion in February 2007 when it was announced, was approved by XM and Sirius shareholders last December.

Originally, the agency barred satellite radio companies from combining. Critics said a merger would create a monopoly, but executives argued that satellite radio faces more competition from Internet music services, music playing phones, and online music stores like Apple's iTunes that allow people to play music on iPods.

While the proposed merger sailed through a U.S. Department of Justice review without conditions, key congressional Democrats had urged the FCC to impose limits designed to protect consumers.