An old dispute between the Federal Communications Commission and XM Satellite Radio could cause the D.C. company headaches as it continues its attempt to merge with its competitor Sirius.
XM has negotiated with the FCC over its network of antennas, which it uses to supplement the reach of its satellite fleet. The company has about 800 antennas, and a “few hundred” of them do not comply with the plans it originally filed with the FCC, spokesman Chance Patterson said Thursday.
XM informed the FCC of the discrepancies last year, according to a March 1 regulatory filing by the company. Some of its antennas are in slightly different locations than the original plan, or were different models, Patterson said. Others violate FCC standards for signal emission. The FCC sent the company a letter of inquiry related to the issue in February, the filing said.
XM has addressed the problem by updating its list of antenna locations, lowering signals in some locations and turning antennas off entirely in other spots, Patterson said. XM is still waiting for FCC approval of the changes and does not know whether it will be subject to fines, Patterson said.
Though Patterson views the antenna problems and its potential merger with Sirius as “separate issues,” controversy over the antennas could be a political hurdle for the company, analyst Shaun Parvez of Cowen & Co. said Thursday.
Though Parvez and many other analysts predict a 50 percent or better chance of the merger being approved, he said any skeletons in XM’s closet, particularly ones that show the company as not regulatory-friendly, can hurt the companies’ chances.
“Our analysis is based on fundamentals, laws and regulations,” Parvez said. “Politics is a totally different ball game.”
