NAB highlights breach of rules by XM, Sirius

The National Association of Broadcasters (NAB) is calling attention to violations by XM Satellite Radio Holdings and Sirius Satellite Radio Inc. of Federal Communications Commission (FCC) rules as part of the trade group’s campaign to derail the companies’ proposed merger.

Earlier this year, the NAB filed a request under the Freedom of Information Act (FOIA) with the agency to force XM and Sirius to hand over documents regarding radios that were emitting signals that were too strong and hundreds of antennas XM had placed in unapproved sites.

The NAB then argued in a July 18 filing to the FCC that information about these infractions is “inextricably linked to the pending application of XM and Sirius” to merge. It urged the agency to move ahead with its ruling to partially grant the trade group’s FOIA request and overlook objections from XM and Sirius. Both companies, as well as some of their current and former employees, had filed “applications for review” to oppose the FCC’s ruling in the FOIA matter.

“Many objective observers would make the claim that they’re trying to hide something,” NAB spokesman Dennis Wharton said. Calling the infractions “brazen,” he argued that they cast light on whether the merged company can be relied upon to adhere to any merger guidelines.

“If you’re asking the government to give you a monopoly, you ought to be as pure as the driven snow in your practices and your communication with the government,” he said.

The companies portrayed the NAB filing as a ploy to stir up opposition to the merger, which must be approved by the Justice Department and the FCC.

“The NAB will do and say anything to try to block the merger of XM and Sirius,” a Sirius spokeswoman said. “As more and more consumers voice their support for the merger of XM and Sirius, the more fearful of increased competition the NAB becomes and the more desperate their actions in response.”

 A spokesman for XM said: “The NAB is abusing the FOIA process. The FCC already has all of the information that the NAB is seeking, and under well-settled precedent, these enforcement matters have no relevance to the FCC’s merger proceeding.”

The representatives said that both companies take their regulatory obligations to the FCC “very seriously.” The companies, they said, were cooperating fully with the agency’s investigation and all current products were fully in compliance with FCC rules.

At issue are components known as FM modulators that allow consumers to hook up satellite radios to built-in car radio systems. Some of the modulators had such strong emissions that they interrupted radio broadcasts in nearby cars, prompting several listeners to complain to radio stations.

In addition, XM had mischaracterized in filings to the FCC the location and signal strength of hundreds of antennas, or terrestrial repeaters, it uses to supplement the signals it beams from its satellites. A Sirius spokeswoman noted that the company had just eleven antennas out of compliance, which the company shut down promptly after it became aware of the problem.

Regarding its investigation of the satellite radio companies’ infractions, an FCC spokeswoman said, “The FCC is aware of this issue and the matter is currently under consideration.” The FCC does not comment on FOIA requests.

The FCC is unlikely to treat such infractions lightly, telecommunications attorney Michael Gardner argued.

“Candor is a big thing for licensees, and the broadcasters have always been required to be fully forthright,” he said.

He cited the case of RKO Broadcasting, which was stripped of its licenses for several of its TV and radio stations back in the 1970s because of the company’s lack of candor in responding to a probe.

But Gardner argued that the infractions wouldn’t derail the XM-Sirius merger, which he said had gotten a boost from the companies’ recent announcement that they will allow consumers to purchase stations on an à la carte basis or in select bundles. The move could win over FCC Chairman Kevin J. Martin, who has long advocated à la carte pricing for cable and broadcasters as a means for parents to avoid indecent and violent programming.

 “I think for Kevin Martin to get a major industry concession [on the issue of à la carte], regardless of who makes it, is such a major accomplishment,” Gardner said.