FCC Commissioner Meredith Attwell Baker Resigns
For Sirius XM (NASDAQ:SIRI) this will certainly be interesting news. Baker was frequently lobbied by the satellite radio provider regarding their request to get an FCC mandated price freeze lifted. Sirius XM’s Mel Karmazin spoke publicly about a potential rate hike during the companies Q1 conference call a week and a half ago. The company can not raise prices until a decision is made by the FCC on the issue. At this point it would appear that if no decision on the price freeze is issued prior to Baker’s June 3 departure, the company could have to wait for a new FCC commissioner to be sworn in. The FCC has come under intense scrutiny lately and has seemed to be slow in issuing decisions.
Certainly satellite radio investors will want to follow this issue closely as it could carry implications to issues surrounding satellite radio in the immediate future.
Position – Long Sirius XM Radio
FWIW Spencer… you kind of have it backwards. It’s up to the FCC to act before the 3rd anniversary of the merger to extend the price freeze. Recall, the price freeze was a voluntary one — for 36 months.
Sirius and XM have been petitioning the FCC not to “extend it” longer… not to “unfreeze” it. If the FCC takes no action, then Sirius XM will have a pretty strong legal arguement to either move forward with no “voluntary prize freeze” — or to take the FCC to Court regarding the date being exceeded.
Regardless, it is up to the FCC to extend it at this point.
“For the foregoing reasons, and in particular, in light of the increasingly competitive landscape for audio entertainment, there is no need for the Commission to seek to extend or modify the subject rate cap and Sirius XM requests that the FCC take no steps to do so.”
— January 22, 2011
http://hraunfoss.fcc.gov/edocs.....-129A1.pdf
“During the call, we reviewed the comments and reply comments filed in the Sirius XM rate proceeding. Specifically, we discussed Sirius XM’s position that the record does not support a continued rate cap and that the agency should act quickly to make clear that the FCC will not seek to impose an additional rate cap.”
— March 22, 2011
“Moreover, any decision to impose a continued price cap based on this record would be legally infirm. First, as Sirius XM has shown, the FCC fundamentally lacks authority to impose a cap on Sirius XM’s rates. Congress has not conveyed authority, express or ancillary, to the FCC to regulate the rates of the satellite radio services offered by Sirius XM.”
— March 11, 2011
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Homer….
interesting points, but the FCC has control, and stated,
“Some commenters submit that the price cap should be longer than three years, arguing that the potential harms will still remain at the end of the period.327 We do not know what the competitive landscape will be like in three years. Accordingly, six months prior to the expiration of the commitment period, the Commission will seek public comment on whether the cap continues to be necessary in the public interest. The Commission will then determine whether it should be modified, removed, or extended.328”
328 “Although it is not part of Applicants’ voluntary commitment, we are conditioning our approval of the merger on the Commission’s ability to modify or extend the price cap beyond three years. We also are conditioning our approval of the transaction on the merged entity’s continuing adherence to the other commitments and conditions, as specified herein, which continue indefinitely.”
Thus, I do not think an inaction by the FCC would constitute an immediate freedom for Sirius XM, although they could argue that.
>>>Thus, I do not think an inaction by the FCC would constitute an immediate freedom for Sirius XM, although they could argue that.
Spencer, remember – it was voluntary and even the NY Courts noted that the FCC has no authority to regulate their rates, since Sirius XM is not a common carrier.
Could the FCC extend the cap? Sure, and I believe that Sirius XM will fight it.
But what if the FCC does nothing? I can 100% gaurantee you that it will be Sirius XM vs. FCC in DC Circuit Court of Appeals on July 29, 2011.
By law, the FCC must say something… either modifying, extending or eliminating the price cap. They must do something. If they don’t, Sirius XM will be in a very rightful position of a lawsuit. I further believe that if the FCC tries to extend it, that Sirius XM will challange it. Further, the FCC cannot extend it for “more comments” too. They would be stepping way over their bounds to do that.
Regardless, something will happen by July 28. The FCC cannot do nothing.
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Homer….
Agreed. The FCC does have to act, but what we do not know is exactly when they do that. They could potentially extend it, and yes, they would have a fight on their hands. What we can not forget is that Sirius XM agreed to allowing the FCC this control.