The FCC has no intentions of bringing back the Fairness Doctrine, said FCC Chairman Kevin Martin. And he cited satellite radio as one of the reasons.

The Fairness Doctrine was first instituted in the late '40s, but was finally put to sleep in 1987 when it was determined the doctrine was not in the public interest.

Several Democratic lawmakers suggested that Congress take another look at the doctrine after conservative radio talk show hosts aggressively attacked an immigration reform bill when it was on the Senate floor, contributing to its defeat. Representative Mike Pence (R-IN) and other Republicans in both the House and Senate countered by introducing legislation to bar the FCC from reinstating the rule.

But Martin effectively squashed the issue in a letter to Pence that was made public today. The FCC Chairman said that the Commission has no intensions of revisiting the doctrine, and that government regulation wasn't needed to ensure public access to a wide range of opinion.

"Indeed, with the continued proliferation of additional sources of information and programming, including satellite broadcasting and the Internet, the need for the Fairness Doctrine has lessened even further since 1987," wrote Martin.

And THAT is pretty cool to see.

[Breitbart]
Thanks espnjason!

When Sirius and XM submitted their plans for A La Carte pricing tiers earlier this week, they undoubtedly raised their chances of having the merger approved by the FCC. Chairman Kevin Martin has always had A La Carte on the top of his agenda, and the proposed Sirius-XM plans sets a precedence for the rest of the media industry. Moreover, it supports the thought that the merger is in the public interest, which is the main guiding factor the FCC considers in approving deals like this.

But what about the DOJ?

The Department of Justice has a less transparent process, but their decision to define the relevant market is the keystone to this whole deal.

Luckily. a recent report by Washington Analysis, a firm that conducts economic and political legislative and regulatory analysis, has provided some updates on the review process over at the DOJ. They are optimistic that the merger will be approved by the DOJ, actually going against the current consensus. Here's some key takeaways:

Document Gathering
The DOJ is still in the document gathering stage. Washington Analysis said they "have reason to believe that there are no smoking guns" as was the case in the Wild Oats-Whole Foods review. No news is good news.

Customer Support
The support of OEM auto manufacturers and retailers like Circuit City weighs heavily on the process. These partners have the most to lose if the merger wasn't going to move more units, and the A La Carte pricing should do just that.

Chief Economist
Last September, Professor Dennis Carlton was appointed Deputy Assistant Attorney General for Economic Analysis. According to Washington Analysts, Carlton is from the "dynamic market" school of thought and is likely to have a more expansive view of the audio entertainment sector. The relevant market in turn wouldn't be confined to two satellite radio companies.

Efficiencies
The merger was reviewed by an independent third party which concluded that there would be hundreds of millions in annual savings. Washington Analysis feels this is important in the DOJ review, because it supports the argument that rates would come down after the merger.

The DOJ is generally hard to gauge during interviews because they like to play devil's advocate for each party they talk to. If they think you're in favor of the merger, they'll ask questions that argue in opposition. If they think you oppose it, they'll ask favoring questions. I've talked to several who were interviewed by the DOJ, and they weren't able to determine which way the DOJ was leaning.

From a timing standpoint, you can expect the DOJ to make the first move, followed by the FCC. They didn't in the DirecTV-EchoStar deal, but they acted pretty close to each other (and both rejected the deal so it didn't matter anyway). We can probably expect the DOJ to make their move sometime in late-Fall.

Nothing's changed obviously, it's still a discretionary matter. But this report definitely has some interesting insight behind the process. And in the end, it's only a few more months before this madness is over.

Representatives Bart Stupak (D-MI) and Steven LaTourette (R-OH) have written to FCC Chairman Kevin Martin and Assistant Attorney General Thomas Bennett, regarding the proposed XM/Sirius merger.

Stupak and LaTourette asked that both organizations deny the proposed satellite radio merger.

The letter seems to repeat the NAB's mantra, referring back to the original 1997 SDARS license that stated that there must be at least two satellite radio providers. The FCC is currently seeking public comment regarding this exact language in the license.

The Congressmen also say that XM and Sirius are different from terrestrial radio and iPods.

"There is currently no existing audio service or product that qualifies as a viable substitute for satellite radio that could constrain the behavior of an XM-Sirius monopoly," Stupak and LaTourette wrote.

Stupak and LaTourette concluded by asking that the DOJ and FCC "preserve national radio competition, and safeguard the interests of American consumers by denying this merger."

This opposition comes on the heals of a separate letter, signed by 72 members of the House, asking to have the merger denied.

[Read full letter (PDF) via FMQB] 

Primosphere was one of the four companies who bid for the SDARS licenses back in the late-90s, and as you can tell, they lost.

Now, as a result of the pending Sirius-XM merger, they want back in.

In 1996, Primosphere Limited Partnership bid $68 million for a SDARS license, stating that they intended on restoring music genres no longer available in major radio markets. The service would have essentially been ad-supported satellite radio. But they lost, and in 1997 the FCC officially dismissed their application.

But Primosphere didn't give up. They filed a series of petitions between the time their application was dismissed, all the way into 2004 when Primosphere submitted a motion to withdraw the Application for Review.

But the FCC never acted on the motion to withdraw. And in February, right after the Sirius-XM merger was announced, Primosphere decided to withdraw its withdrawal. (Yes, you read that right.)

The reason?

Because the FCC stated that they would "re-auction the [SDARS] license among the other existing applicants" should one of the licenses be otherwise denied. And if Primosphere is still one of the existing applicants, then they are still in the running.

So Primosphere requested that if the Sirius-XM merger is approved, that the other half of the S-band spectrum available to be given to Primosphere.

Primosphere has said they will construct and launch their own satellites (they've in fact already paid the launch fees for the other two satellites they originally proposed), and expect they can be up and running with their own service within 5 years.

"A better way to avoid the anticompetitive effects of the proposed XM/Sirius merger would be to have a new competitor in the SDARS who could begin operating immediately," Primosphere wrote in a FCC filing (PDF).

Fast forward to July 3rd, and Primosphere is now asking the FCC (PDF) to consolidate the Sirius-XM merger application, with its application to launch and operate a satellite radio service.

This is getting really interesting.

[via Satellite Radio TechWorld] 

The first phase of the Copyright Royalty Board's trial to determine Satellite Radio's royalties was completed late last week.

XM and Sirius, as well as SoundExchange, both presented their cases from June 4th through June 28th, 2007.

There is now a break in the trial while the parties prepare their rebuttal cases. Rebuttal hearings are scheduled to take place August 15th through August 30th.

A witness for SoundExchange, Dr. Michael Pelcovits, was unavailable the week of June 25th and consequently, his testimony will take place on July 9th. MusicChoice was also supposed to be part of the hearings, but they have reached an agreement with SoundExchange, and therefore no further proceedings are necessary for them.

In their testimony, both Sirius and XM Satellite Radio requested a rate of 0.88% of gross revenue received, for the period from January 1, 2007 to December 31, 2012.

"Sirius has paid millions of dollars, and is willing to pay millions of dollars more, to the record companies for a performance right for which our primary competition - terrestrial radio - does not have to pay," said Mel Karmazin in his written testimony. "However, any fee must acount for the enormous costs incurred, risks faced and investments made by Sirius, and for the fact that our revenues must cover a host of functions that other licensees do not perform."

"Sound recording performances are available everywhere, for free," Karmazin continued. "The right to make those performances, at issue in this proceeding, does not drive our revenues."

"It is the skill behind XM music programming that makes XM music programming attractive to its subscribers," wrote Gary Parsons in his testimony. "But that value exists because of what XM contributes it does not flow merely from license to sound recordings."

"Moreover high royalty would be unfair to XM in light of the fact that XM's major competitors in broadcast radio do not pay any royalties whatsoever to sound recording labels or performers," continued Parsons. "A high royalty in this proceeding would further unfairly tilt the playing field in favor of terrestrial broadcasting, and could further distort competition in the radio industry."

SoundExchange on the otherhand, asked for a sliding scale of royalties - starting at 10% of revenue and growing to an incredible 23% of all revenue - increasing annually:

• For 2007, SoundExchange asks for 10% of all revenue, or $1.10 per month per subscription (whichever is higher)
• For 2008, the rate grows to 12% of all revenue, or $1.30 per month per subscription
  
• 2009: 15% of all revenue, or $1.60/subscription
• 2010: 18% of all revenue, or $1.95/subscription
• 2011: 20% of all revenue, or $2.35/subscription
• 2013: 23% of all revenue, or $2.75/subscription

Both propositions are for performance licenses with ephemeral (temporary) copies.

You can read the full testimonies of Sirius Satellite Radio, XM Satellite Radio as well as SoundExchange and MusicChoice on the CRB's website. More detailed information will be posted closer to the start of the rebuttal hearings.

[via Satellite Radio TechWorld]