It's been 70 days since Sirius-XM filed with federal regulators, and yet the merger hasn't even passed the preliminary review process. The FCC has yet to start its 180-day merger-review clock, and that smells like trouble for many.

"This constitutes the longest application-to-clock delay in FCC history," David Trout of M&A Researcher says in a report Wednesday. "There is simply no way to view the delay in a positive light."

And the delay seems to indicate that a decision won't arrive until sometime in 2008. That's cutting it close to election time, when political attention is far more focused elsewhere.

"It seems relatively safe to assume that the intervention -- in the form of face-to-face meetings -- of several politicians and organizations represented by former politicians is slowing the preliminary review process," Trout continued.

This chart illustrates how long this merger review process is taking, when compared to other major mergers:

"Each passing day without the FCC's pleading cycle and review clock being initiated threatens [hopes for] an FCC decision before the end of 2007," Trout writes.

[via TheStreet]

The League of Rural Voters today announced their support for the Sirius-XM merger, joining with several other organizations who have recently publicly supported the merger.

It's an interesting addition to the roster of supporters, because while the prior organizations addressed the FCC's concerns on ethnic diversity in the media - this directly addresses concerns of adequate competition in rural areas.

The League of Rural Voters said the combined entity would offer listeners in rural communities more content options at lower prices than what is currently available from Sirius and XM separately.

"In many rural areas throughout America, commercial radio reception can be extremely limited. Satellite radio has offered listeners in rural areas a robust alternative with hundreds of specialized channels that meet the programing needs of rural America," said Niel Ritchie, the League’s Executive Director. The organization also pointed to rural listeners who depend on satellite radio’s emergency and public safety stations, while terrestrial radio's corporate consolidation has created so-called "local news and weather" service which are actually delivered from offices hundreds of miles away.

One of the key reasons why the DirecTV-EchoStar merger wasn't approved by the FCC was because it was felt that rural communities (areas where an over-the-air TV signal isn't available) would lose out in competitive choices.

It seems that the League of Rural Voters is seeing that the merger would be more of a "standardization" of the satellite radio medium - opening up the exclusive content from both providers under a single subscription.

There's another merger going on in the ever popular audio-over-satellite market, with Muzak and DMX looking to tie the knot.

And just like our own Sirius-XM merger, the DOJ has issued a "Second Request" under the Hart-Scott-Rodino Act. Both companies submitted an HSR filing to the DOJ back in April, asking for antitrust regulators to give the go-ahead for the merger.

If merged, the newly formed entity would be packaged and sold to an unnamed third party.

"We believe the additional information requested will serve to confirm that a merger of the two companies will not adversely affect competition, will result in significant synergies for the combined companies, and will benefit our customers," a Muzak spokesperson said.

With both DMX-Muzak and Sirius-XM looking to merge, you have to wonder whether regulators are questioning the strength that satellite-based companies possess, versus their earth-bound competitors.

[Digital Music News]
Thanks Tim!

A recent Bridge Ratings study took a look at the competitive media landscape and the usage of the U.S. population. The results are pretty interesting...

The survey found that about 450,000 people say they listen to HD Radio daily.

Now, 57 million Americans listen to some form of Internet radio in a typical week, according to the study. Compare this to Sirius and XM, who combined pull in nearly 15 million subscribers.

Still, terrestrial radio continues to dominate, and MP3 players also hold a massive amount of earshare. An amazing 280 million Americans listen to terrestrial radio in an average week. While MP3 players - yes, including the iPod - reach 90 million Americans.

So let's break this down in percentages:

• HD Radio: 0.0015% of the U.S. population
  
• Satellite Radio: 4.8% of the U.S. population
• Internet Radio: 21% of the U.S. population
• MP3 Players: 30.4% of the U.S. population
• Terrestrial Radio: 93.7% of the U.S. population

[Bridge Ratings]

The largest and oldest Latino organization in the U.S., the League of United Latin American Citizens (LULAC), has publicly affirmed their support for the merger of Sirius and XM.

"This is obviously important to LULAC, and this is likely to provide both Hispanic programmers and consumers with opportunities and choices," said Rosa Rosales, LULAC National President. "More programming means that the ever diverse American consuming public can look to Satellite radio for news and entertainment."

Several channels are cited as being important to the Hispanic American population, including ESPN Deportes, CNN Espanol, and several Latin music channels.

"More programming means more jobs -- from the on-talent to production crews. And more programming means that the ever creative and entrepreneurial American spirit has yet one more potential outlet and distribution channel," said Brent Wilkes, LULAC Executive Director.

Interestingly, in most cases, LULAC said they would support the maintenance of competition in a relevant market - but this merger is different. In this case there are "considerable benefits from the proposed merger" that they say outweighs any countervailing concerns.

There's an obvious media blitz of minority groups coming out in support of the merger.

While the NAB continues to beat their repetitious drum, it seems that the team on Sirius-XM's side is addressing the FCC's concerns of diversity in media. With minorities now representing nearly 1/3 of the U.S. population, it's a legitimate purpose, and one that can be directly attributed to serving the "public interest."

Sometime ago I was sent these spec TV spots (videos below) that took a different approach to promoting Sirius. And I really think the concept has potential.

In most other commercial spots - by both Sirius and XM - it's essentially been a one-way message: The companies telling the viewer how great the service is, and the variety of content available to them.

But these spots take a different approach.

Instead they give the personal experience of a single subscriber (a taxi driver... who is character) from their own point of view. I could see different spots featuring personal experiences from soccer moms, truck drivers, real estate agents, contractors, etc. Anyone who spends a lot of time in their car.

Anyway, take a look, and remember that they're test spots, so you're viewing them in raw form:

The NAB yesterday sent a letter to the FCC in response to XM and Sirius' request to deny the NAB's FOIA (Freedom of Information Act) request for information related to FM modulators and terrestrial repeater compliance.

In the letter, the NAB says they would like the records made public so that they may evaluate Sirius and XM's "character qualifications."

The NAB also wants to determine "whether the companies can be relied upon in the future to comply with FCC rules or with any conditions imposed or offered as part of the merger."

How noble.

[Read the full letter (PDF) via FMQB]

Now this is truly amusing. Clear Channel Radio Chief Executive John Hogan, in an interview with Forbes, said that there "certainly isn't much variety" in satellite radio's music programming.

The strikingly ironic comments came about from a question about satellite radio's influence on Clear Channel's programming decisions.

"Satellite actually has not influenced us at all--consumers have," Hogan said. "What you're hearing on our radio stations and hearing and seeing on our Web sites is really a reflection of consumers, and not of a competitor."

But of course, this impartial attitude quickly disappeared when John Hogan started describing what it is that satellite radio - particularly XM - offers listeners:

"We currently program ... [10] radio stations on XM, that's one of our distribution platforms. I think that the stations we're programming on XM are far and away the best programmed and the best produced," said the Clear Channel Radio chief. "I'm sort of underwhelmed by satellite. I think what they have is a lot of really interesting channel titles. But when you listen to them, there's not much there."

"There certainly isn't much variety, and what I think is really the essence of radio--that is, what is between the records--is really pretty lame."

(and cue laughter... now) 

[Forbes]

It seems that everytime a lawmaker comes out in opposition of the Sirius-XM merger, they have some level of financial motivation. First there was Arizona's Mike Hubbard, who ended up owning his own radio station, and now it turns out that Senator Herb Kohl has his own financial stake in a terrestrial radio endeavor.

See, Senator Kohl owns the Milwaukee Bucks - here's the public disclosure (PDF). Now normally that's all fine and dandy.

But it turns out that the Milwaukee Bucks have worked out a deal with WTMJ-AM (620) to sell advertising for when their games air.

Previously the Bucks and WTMJ shared that revenue, but with the 2007-2008 season, the Milwaukee Bucks will assume full responsibility for all their broadcast advertising sales.

In short, Senator Kohl directly earns revenue from Bucks broadcasts on WTMJ.

Connect the dots.

Sirius is the exclusive satellite radio broadcaster of the NBA. If XM and Sirius merge, then XM's 8 million subscribers can have access to these NBA games. And a this could put the amount of revenue that Senator Kohl and his company can generate, at risk.

Conflict of interest? You tell me.

[via Yahoo! Finance Sirius message board]
Thanks Brandon!

Senator Herb Kohl (D-Wis.) recently sent a letter to the Justice Department and the FCC calling on regulators to oppose the Sirius-XM deal.

Kohl's opposition of the merger is not necessarily new, but being the chairman of the Senate's Subcommittee on Antitrust, Competition Policy and Consumer Rights, it does hold some weight. He is in fact the first chairman of the four Congressional panels that held hearings on the merger (Sen. Kohl's subcommittee held the hearing back in late March) to come out against it publicly.

Senator Kohl takes the position that satellite radio is in fact it's own confined market, and not part of an overall audio entertainment marketplace.

He also didn't buy the argument that future technologies threaten the stance of the satellite radio market, writing that "no other technology available today is a substitute for the satellite radio."

"Our concern is the marketplace today. Consumers should not suffer the price increases likely to result from a merger to monopoly because of a vague hope that new technologies may deliver new competitive alternative sometime in the future," he continued.

The problem with Senator Kohl's conclusion is that, if in fact satellite radio is defined as it's own finite market, then this definition opens up either Sirius or XM for takeover by a terrestrial radio corporation (such as CBS Radio) without fear of anti-trust issues.

And that is scary.

[Reuters & Wall Street Journal]