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FCC Adopts Channel-Lease Details for Sirius XM

Action paves the way for satcaster to satisfy a condition of merger approval

The FCC has adopted implementation details for Sirius and XM to lease some of their channel capacity to third parties. The companies had agreed to the arrangement as a condition of the FCC’s merger approval, now more than two years old.

The arrangement will involve 4 percent of the channels of both companies; the idea is to create opportunities for new entries, such as women and minorities, to deliver programming. In its decision, the FCC changed the definition of the so-called “Qualified Entities” as race-neutral to ensure they’re independent of Sirius XM and to avoid potential litigation.

The commission reversed its initial decision and has now decided to involve Sirius XM in the process of selecting who would lease the channels, making sure the entities are qualified, but without editorial control over their programming.

In its order, the FCC provided instructions on the allocation of channel capacity, establish requirements for transparency in the selection process, and offer guidance on certain contract implementation issues, leaving other details to be negotiated between Sirius XM and the third parties.

However, Sirius XM must submit their proposed lessees to the Media Bureau for review before signing a deal. The satcaster must have their channel-lease deals finalized by April 17, 2011 and report to the commission within 30 days who they’ve signed deals with and when the new programming would begin to air.

The commission has also developed criteria for “aggrieved parties” to file complaints with the agency about the arrangements.

FCC Chairman Julius Genachowski said the action paves the way for the “prompt introduction of new services, giving smaller, independent programmers a meaningful opportunity” to get satellite radio distribution.

Commissioner Michael Copps, who dissented to the satellite radio merger, said it quickly became apparent that this merger condition, “well intentioned, but hastily and inartfully drawn, was going to cause problems.” The conditions in the order are fairly rigorous, Copps said.

“Certainly a merger of this size and scope requires incentive for the new company to offer an array of program channels that otherwise might not make it to the air in a consolidated market,” he said.

Copps encouraged qualified participants to apply to lease the channels.