Remember that resolution against the XM-Sirius merger that was passed in Alabama? Well it seems that several keen-eyed commenters have noticed that the chief sponsor of the resolution actually owns a terrestrial radio station as well as a production company.

Mike Hubbard, Alabama's House Minority Leader and the chief sponsor of a resolution against the Sirius-XM merger (HJR144) cites his own possible conflict of interest in his official bio:

"Hubbard’s company, Auburn Network, Inc., owns and operates WANI NewsTalk 1400, a commercial radio station in the Auburn/Opelika market as well as Studio 197, an audio production company serving the national broadcast industry..."

In his legislative bio, we also learn that Hubbard is a member of the Alabama Broadcasters Association which identifies itself as a trade association representing radio and televisions stations. The ABA itself has officially denounced the XM-Sirius merger, obviously using the strength of its 287 members (particularly one certain House Minority Leader) to push forward their agenda.

Conflict of interest? Nah, it's for the good of the people! 

[via The Port Chronicle]

The Alabama House of Representatives has unanimously passed a resolution opposing the proposed XM and Sirius merger.

House Joint Resolution 144 was introduced last Tuesday, March 20th, and will now go to the Alabama Senate.

The resolution stated "that the Attorney General of the United States and the Federal Communications Commission are encouraged to disapprove the proposed merger between the only two national satellite radio companies."

The resolution also says: "that the merger will result in consumers, musicians, and other entertainers being subject to a single company with unlimited market power to impose anti-competitive terms, conditions, and prices;" "the combination of these two satellite radio companies will potentially restrict programming, reduce diversity, and diminish creativity; each result negatively impacting the public interest;" and "unquestionably, a government sanctioned monopoly is harmful to consumers and the public and should be avoided and denied."

In a statement, the NAB said that "It is our hope that similar resolutions will be introduced in other states."

[FMQB] 

UPDATE: XM Satellite Radio has issued a statement about the Alabama resolution:

"The NAB’s unprecedented campaign against the merger demonstrates that AM and FM broadcasters vigorously compete with satellite radio. The more the NAB does to oppose the merger, the more it weakens their credibility."

FCC Chairman Kevin Martin and the Parents Television Council (PTC) both had words of praise over allowing satellite radio subscribers the ability to block adult-oriented channels - and to subsequently give a rebate for those blocked channels.

It's a plan that was outlined by Sirius CEO Mel Karmazin last week, as well as in Sirius and XM's official merger filing. If a subscriber wishes to block a channel (like the ever-objectionable Martha Stewart Living Radio channel), the merged Sirius-XM would give a rebate back for that channel's value.

Karmazin called it a more "à la carte" approach - a plan that both the FCC's Kevin Martin and the PTC seemed to approve of.

Martin said Karmazin's proposal "sounded, in general, like a good idea," although he has yet to fully study it. "One of the options I have encouraged," he said, "is allowing parents to block channels and also [have] the companies reimburse the price they are charging consumers for content they don't want. I think that a block and reimburse mechanism may be a good idea."

Parents Television Council Government Affairs Director Dan Isett called it "a significant step in the right direction. You finally have a major media outlet recognizing the reality about some of these subscription-based platforms."

The PTC has long been a vocal anti-indecency group (making up for a very large number of the FCC indecency complaints) and consists of over a 1,000,000 members.

[Broadcasting & Cable]

Sirius Satellite Radio's application for repeater towers in Hawaii and Alaska has brought on the ire of the NAB, and yet the WCS Coalition (who traditionally opposed anything regarding satellite radio repeater towers) is not opposing it.

Sirius' application for repeaters in Hawaii and Alaska are currently in a comment period where other organizations have the right to oppose or support the FCC special temporary authority application.

Traditionally, we've seen the WCS Coalition oppose these STAs, yet they've delivered a shocker and stated that they would not oppose Sirius' request for the Alaska/Hawaii repeaters - nor would they oppose 15 other repeaters. Even more crazy, the WCS Coalition will in fact no longer oppose any repeaters below 2,000 EIRP.

Yet the NAB has filed a petition opposing the repeaters. Why? Not because of any interference concerns. Nope. Their reasoning is that the original 1997 DARS license intended the repeaters to "re-transmit the information from the satellite to overcome the effects of signal blockage and multipath interference" - and that's bad. See, the NAB doesn't mind if the repeaters are used to improve satellite signal, but they don't like it if it extends the signal.

Sounds reasonable right? I didn't think so.

It's good to see that the NAB is always looking out for the public interest.

[NAB Petition to Deny (PDF)]
[Satellite Radio TechWorld]

The National Music Publishers Association has filed a lawsuit against XM Satellite Radio claiming that XM engages in massive copyright infringement through the ability to record satellite radio broadcasts.

According to the NMPA, the suit was filed after months of discussions between NMPA and XM regarding the satellite radio company's obligation to compensate creators for the songs it distributes. The plaintiffs in the suit are Famous Music, Warner/Chappell, Sony/ATV and EMI music publishers.

"Filing a lawsuit was our last resort, but we felt that we had no choice," NMPA president and CEO David Israelite said. "We want new technologies to succeed, but it can't be at the expense of the creators of music. All that we ask is that music publishers and songwriters be fairly compensated for their efforts."

Yet amazingly enough, XM already pays licenses for compositions from performing rights organizations ASCAP, BMI and SESAC. XM dismissed the lawsuit as a bargaining chip.

"The lawsuit filed by the NMPA is a negotiating tactic to gain an advantage in our ongoing business discussions," says a spokesman for XM.

The complaint seeks a maximum of $150,000 in statutory damages for each work infringed by XM.

"XM has been profiting at the expense of others," said Debra Wong Yang of Gibson, Dunn & Crutcher Llp., the lead attorney on the case. "The XM + MP3 service constitutes pervasive and willful copyright infringement to the overwhelming detriment of copyright holders, legitimate online music services and, ultimately, consumers."

XM contends that the NMPA failed to mention that the company pays millions in royalties each year.

"XM pays royalties to writers and composers who are also compensated by our device manufacturers," the company said. "We are confident that the lawsuit is without merit and that we will prevail."

[The Hollywood Reporter] 

In the FCC application for the merger of both satellite radio companies, XM-Sirius state that no existing Commission rules bar the one entity from buying the other.

This differs greatly from what we've all thought to be the case, particularly the "Transfers" section of the 1997 DARS license.

"The Commission’s published rules do not prohibit one satellite radio licensee from acquiring control of the other," Sirius-XM said in a joint filing.

"The Commission noted in its 1997 order authorizing satellite radio as a service that satellite radio 'licensees, like other satellite licensees, will be subject to rule 25.118.' That rule, now Section 25.119, implements the statutory requirement that the Commission grant transfer applications if doing so is in the public interest, and sets forth the basic procedures for filing an application."

Note the requirement of "the public interest" again. Defining and ultimately deciding on the public's interest is a very subjective procedure and can be accomplished by a number of concessions (i.e., the "more choice, lower prices" mantra). 

"While the Commission stated in the same order that 'one licensee will not be permitted to acquire control of the other remaining satellite DARS license,' this language was not codified in the Code of Federal Regulations and thus is not a binding FCC regulation. To the contrary, it is merely a policy statement reflecting the Commission’s view, based on the evidence available in 1997, that two satellite radio licensees were needed to have enough competition in the audio entertainment market."

So they're pushing that the merger in fact in the public's best interests (a la carte pricing, lower entry point, interoperable receivers) and that XM-Sirius indeed compete with a greater audio entertainment marketplace (competing with terrestrial radio, time-shifted MP3 players, Slacker-style devices, mobile services, upcoming WiMAX initiative - all making lines of "distribution" blurred).

If they are able to convince the FCC that these two aspects are the case, then they look to have a good chance to getting this to go through. The first aspect (public interest) seems easier to accomplish than the second (relevant market) in my humble, and completely uneducated, opinion.

[via The Washington Post] 

Yesterday, both Sirius and XM filed the required FCC application to transfer their licenses held by both companies for the merger .

In it Sirius-XM state their case for proposing the merger - ultimately arguing that the proposed merger of the two is in the public's interest. For those of you following these merger proceedings, you may notice that the term "Public Interest" keeps popping up - this is essentially the gold standard that the FCC uses when determining changes in policy. Proving that your actions are in the public interest can be done many ways, and XM-Sirius go into details spelling this out for the FCC.

For industry-watchers like myself, there's actually little "news" that comes from reading the application. But there's some fun snippets that should be highlighted (especially for those who don't feel like reading the whole thing). 

The Senate's Subcommittee on Antitrust, Competition Policy and Consumer Rights is holding a hearing on the XM-Sirius merger, today at 2:15pm ET.

Witnesses scheduled to attend include, of course, Mel Karmazin (from the Sirius camp), Mary Quass (from NRG Media, also on the NAB's Board of Directors), David Balto (anti-trust guru), and Gigi B. Sohn (President of advocacy group Public Knowledge).

There's a summary of Public Knowledge's position on the merger available here. Personally I'm in full support of all the terms PK is suggesting.

At first glance there doesn't appear to be a webcast of this hearing. If anyone knows of one, please let us know.
UPDATE: CapitolHearings.org should have a webcast, or check C-SPAN 2 (via Sirius Uplink)

John Ashcroft, who was the head of the Justice Department for four years, apparently approached XM in the days after the Sirius/XM merger announcement - offering his firm's consulting services, according to a spokesman for XM.

XM declined Ashcroft's offer to work as a lobbyist for the company. He was subsequently hired by the NAB, who vehemently opposes the merger. Ashcroft sent a letter recently to his successor Alberto Gonzales blasting the proposed merger

"After the merger was announced, Mr. Ashcroft's firm contacted us about hiring him to assist us," said Nathaniel Brown, a spokesman for XM. "We declined. Apparently the National Association of Broadcasters opted to pay him to parrot their views."

NAB executive director Dennis Wharton said, "NAB approached former Attorney General Ashcroft to review the proposed XM-Sirius merger and offer his honest opinion as an antitrust expert. We are not aware of any alleged previous discussions between Mr. Ashcroft and officials at either satellite radio company."

The Ashcroft Group, had revenue of $2.34 million in 2006, according to opensecrets.org.

The thought Ashcroft was shopping his services to both sides may raise some doubts as to how in-depth his review on the merger. Simply being hired by the NAB alone calls into question Ashcroft's "insight" on the merger. But that he approached both XM and the NAB? Well, that just speaks volumes.

[Wall Street Journal] 

Former Attorney General John Ashcroft has attacked the Sirius/XM merger, saying the combination would leave only one provider in the market.

Ashcroft was hired by the NAB to "examine" the merger.

In a letter sent earlier this week to his replacement as attorney general, Alberto Gonzales, Ashcroft compared the deal to the attempted EchoStar/DirecTV merger.

He also questions Sirius/XM's "hope that the Department will define the market so broadly as to include all terrestrial radio and a number of nascent cutting-edge technologies - the potentials of which remain without full development and deployment."

I would hardly call the iPod a nascent technology or without full deployment - but hey - I can understand that Ashcroft is looking out for his employer's interests.

Ashcroft also feels that XM/Sirius are the only two companies providing their product, which he calls "nationwide mobile mobile multi-channel audio content." (What's HD Radio? What's about IP-based services like Verizon Vcast or Cingular Music? Oh right, these are "nascent" technologies.)

He also brought up the point that in 1997, both XM and Sirius promised to bring to market an interoperable receiver that would receive both services. A promise that they have yet to fulfill (and one that the FCC has yet to truly enforce). Yet given the market conditions, this could be one of the strongest points for the merger - and for serving the public's interests - but that wasn't Ashcroft's point.

Ashcroft's letter was also forwarded by the NAB to lawmakers on the House and Senate Judiciary Committees.

We all know that the NAB opposes the merger, but now they're bringing in the big-guns. It's just sad to see that someone like John Ashcroft, who served as head of the Justice Department for four years, can be bought out so easily.

[Read Full Letter (PDF)]