The FCC has issued a Notice of Proposed Rule Making, which invites comments about whether the "rule" that prohibits XM and Sirius from merging should be waived, modified, or repealed.

In the Commission's 1997 Order, there is language that specifically prohibits one SDARS license holder from owning the other. Sirius and XM have said that the prohibition is a policy statement - and not an actual rule - because it was not codified in the Code of Federal Regulations.

The Notice of Proposed Rule Making opens this issue up for debate. Comments are due 30 days after publication in the Federal Register, with reply comments due 45 days after.

In a joint statement, Sirius and XM said:

"The companies are pleased that the FCC has outlined the full process for reviewing the SIRIUS-XM merger. This action puts all of the FCC decisions regarding approval of the merger on track. We remain confident that the merger is in the public interest, and continue to look forward to completing the regulatory approvals by year end."

Read the full Notice of Proposed Rule Making (PDF).

House Judiciary Antitrust Task Force chairman John Conyers Jr. (D-MI) and ranking member Steve Chabot (R-OH) sent a letter to US Attorney General Alberto Gonzales and FCC Chairman Kevin Martin asking for guidance on the Sirius-XM merger.

In the letter to the FCC and DOJ, Conyers and Chabot asked about the Service Order in the DARS licenses issued a decade ago that prevented the two satcasters from merging. They asked if "circumstances today are similar or different" from the original ruling.

Conyers and Chabot also inquired about the definition of the relevant market, which is the key question when it comes to the antitrust analysis.

"Some witnesses said the market should include local broadcasters, and some claimed the markets for local radio and satellite radio were different because local broadcasters are licensed for specific geographic areas while satellite radio providers have a national service footprint. Please explain what evidence the agency looks for when defining a 'relevant' market as part of its antitrust scrutiny," they wrote in the June 13th letter.

Referencing the failed 2002 DirecTV/EchoStar merger, the letter points to the FCC's finding "that the proposed EchoStar/DirecTV merger was inconsistent with the commission's long-standing policy of not permitting one entity to control all of the spectrum for a particular service." Conyers and Chabot then ask Gonzales and Martin, "Please explain how approval of this merger would be consistent or inconsistent with the finding in the EchoStar/DirecTV order."

While the FCC and DOJ will ultimately decide on the success or failure of the merger, the Congressmen said they would "appreciate" the "consideration" of the many questions presented in the letter.

Read the full letter (PDF)

The Federal Communications Commission has announced the public comment period for the Sirius-XM merger application has started. Comments/petitions are due July 9th, 2007 and responses/oppositions are due July 24th.

The clock has started. 

Sirius and XM have issued the following joint statement regarding the announcement:

"The FCC public comment period is an important step in the regulatory review of our merger and brings us closer to its completion.  The combination of our companies will lead to more choices and better pricing for consumers, and result in a stronger competitor in the rapidly evolving audio entertainment market.  These benefits explain why the merger already has received the strong support of a wide array of minority, consumer, women's and rural organizations.  We are confident that the comments filed with the FCC in the weeks ahead will continue to reflect these significant public interest benefits.

"We look forward to working with the Commission to demonstrate that this merger is in the public interest, will have no anti-competitive effects on the market and to making any appropriate changes in its 1997 licensing order."

[View FCC Announcement (PDF)]

The Sirius-XM merger faces a "high hurdle" because a rule bans the combination, FCC Chairman Kevin Martin told reporters yesterday after an FCC meeting.

"I think this is an unusual merger and I think it faces a high hurdle," Martin said.

The agency hasn't started reviewing the deal because it is still debating the substance of the rules with Sirius and XM, Martin also said.

"It's a little gray whether there's a rule or there isn't a rule," said Sirius CEO Mel Karmazin at a Lehman Bros. conference yesterday.

When the FCC granted licenses to the satellite radio companies 10 years ago, the FCC made a "statement," he said.

"If you go to the rule books, I'm not sure you'll find a rule," said Karmazin.

Karmazin also called the NAB "disgraceful" because of its opposition to the merger. He said the NAB paid organizations and individuals to write letters to agencies and Congressmen urging them to block the combination.

In a statement, Sirius and XM stated that they still "expect the transaction to be completed by the end of 2007.''

[Bloomberg]