A big hot button with the FCC is "diversity in media" - where African-Americans, Hispanics, Women and others have a strong presence in todays media - not just in the sense of programming, but in ownership as well.

And when many diverse groups, including the NAACP and LULAC, came out in favor of the merger many wondered how a merger improve diversity. The two words seem to, by definition, work against each other.

An article today in Black Enterprise explains it all. In short, XM has "The Power" (ch 169) and carries shows featuring Oprah Winfrey, Maya Angelou, Wynton Marsalis and Tyra Banks. Sirius also offers shows featuring Black celebrities and sports figures such as Keyshawn Johnson, Tiki Barber, Jamie Foxx and 50 Cent.

XM's President and interim-CEO Nate Davis, is an African American and a member of XM’s board since 1999. Davis plans to play a pivotal role in the new company if the merger is approved.

By contrast, only 1/8th of full-power radio stations are run by women and people of color in the U.S., and that's despite being two-thirds of the population. Even radio companies like Greenstone Media, with the financial backing of Gloria Steinem, Jane Fonda, and Susan Ness, couldn't survive in today's radio environment. And that's a pretty sad state of affairs.

Now I don't think it's being suggested that a merging of Sirius and XM will miraculously fix the media diversity problem, but both satellite radio providers already have dedicated themselves to providing diverse programming. So I think the thought is that by empowering a combined company to better compete, it opens up more opportunity for diverse programming to reach the population.

[Black Enterprise]

XM and Sirius together spent a total of $810,000 in the first half of 2007 to lobby the federal government, yet the NAB spent a total of $4.3 million during the same period, according to a disclosure form.

XM Satellite Radio spent $580,000, according to public records. Sirius Satellite Radio lobbying firms - the Paul Laxalt Group, Quinn Gillespie & Associates and Ricchetti Inc. - spent $230,000 total through separate filings. A fourth lobbyist, the Amani Group, has not filed a lobbying report yet.

The NAB, which represents roughly 7,000 radio stations, lobbied on various issues including the satellite radio merger, according to the Senate’s public records office. In addition to Congress, the NAB used the $4.3 million to lobby the FCC and the U.S. Patent & Trademark Office.

Under a 1995 law, lobbyists are required to disclose any activity that could influence executive and legislative branch members.

[Forbes]

A comment was recently submitted to the FCC in response to Entravision's comments, disputing the concept that there is a binding rule preventing Sirius and XM from merging.

The reply comments, made by a self-described "citizen and consumer," were sent in response to Entravision's comments (the one where they nobly offered to take, and use, the other half of the satellite radio spectrum) and uses Entravision's own language against them:

According to Entravision, the use of “will” in the ‘Transfer” language section of the 1997 SDARS Report & Order restricts Commission discretion with respect to decisions in the SDARS merger context. If this were true, the Commission would be restricted from exercising discretion while conducting their review of the Consolidated Application and would be bound to the provisions of rule 25.118 which identifies the exception allowing a transfer to be authorized and completed. Yes, in fact, the 1997 SDARS Report & Order states:

We note that DARS licensees, like other satellite licensees, will be subject to rule 25.118, which prohibits transfers or assignments of licenses except upon application to the Commission and upon a finding by the Commission that the public interest would be served thereby.

In other words, Entravision's interpretation of the rule were held true, then the FCC would have to recognize the authority of rule 25.118, and proceed forward.

The NAB's entire arguments against the satellite radio merger are largely based on the prohibitive language in the Transfer section of the 1997 license. But they ignore the language of rule 25.118.

The question is, does rule 25.118 override the entire ‘Transfer’ language section of the 1997 SDARS Report & Order? And since it appears to be internally conflicting, is the whole 'Transfer' section itself non-binding?

This seems like a pretty significant determination to me.

[Read Reply Comment (PDF)]

FCC Commissioner Michael J. Copps appeared on PBS' Bill Moyers Journal recently to discuss the state of media consolidation and the current outlook of the media today.

As always with Commissioner Copps, media consolidation is a sore point. He's never been a big fan of media consolidation (neither has Adelstein), but the interview still remains enlightening throughout the 19 minutes.

They start off the interview showing a clip from one of the recent public hearings on media consolidation:

MICHAEL J COPPS: Now we're back at square one. It's all up for grabs. And if we are going to do better this time around, it's going to be because of input from folks like you.

MIKE MILLS: We must ask the question, is American radio better today than it was 10 years ago? [Audience yells "No!"] ...that was the answer.

A key takeaway from the interview isn't that Copps is against media consolidation just to be against it, he takes the stance that it generally doesn't work towards the public interest. Copps defines "public interest" (which can be up to much debate) as three things: localism, diversity, and competition.

He also reiterated his stance on the shortening of broadcaster's license renewal process (something he brought up strongly during an editorial he wrote which was published in the New York Times).

While Copps doesn't directly address the Sirius-XM merger, it's a good interview to watch to get a sense of where he might stand. I think most would agree with his viewpoint. Question is - in trying to serve the public interest - what effect would a merged satellite radio service have on terrestrial radio in terms of localism, diversity, and competition?

[Watch Video or Read Transcript]
Thanks Bruce!

The National Association of Broadcasters (NAB) has formally issued an apology to the FCC for the misrepresentation of two Congressmen as being opponents of the Sirius-XM merger.

Representatives John Conyers, Jr.(D-MI) and Steve Chabot (R-OH) were listed in four separate ex parte filings among parties who were opposed to the satellite radio merger.

In the letter to the FCC, the NAB wrote:

"While both members have raised questions about the merger, it is inaccurate to characterize them as opposed to the merger. We apologize for any confusion this may have caused."

The filings in question cite a similar document that had listed Toyota as being opposed to the Sirius-XM merger, a point that Toyota objected to in a response filing to the FCC. The NAB subsequently removed Toyota from the "growing chorus of widespread, diverse opposition."

Apparently they will need to remove Rep. Conyers and Rep. Chabot as well.

[Read Letter (PDF) via SiriusBuzz]

J. Gregory Sidak and Hal J. Singer have written an anti-satellite radio merger Op-Ed piece for the Washington Times, one that is riddled with rhetoric and hypocrisy.

Entitled "Misunderstanding the XM/Sirius merger," the piece urges conservatives to "reject the idea of taking two unregulated competitors and creating in their place a brand-new regulated monopoly."

The article also criticizes the block-and-rebate plan, that would refund subscribers who choose to opt-out of adult programming. An amazing stance in a world where we are obsessed with violent and adult content in video games and media. But still, Sidak and Singer pull it off:

"...the Family Research Council blessed the merger after XM and Sirius promised to block sexually explicit channels in exchange for a small rebate. Given the sheer popularity of Howard Stern and similar types of edgy content among satellite radio subscribers, this 'phantom rebate' will likely be redeemed by only a handful of subscribers."

I'm sure the Parent Television Council would disagree with you there. It's not about there "sheer number" but the empowering of the consumer. (Newsflash: there are 130 channels other than Howard Stern on Sirius. Yes, shocking, I know.)

The entire article is generally targeted to the politically minded, particularly conservatives, but yet at the same time managed to denounce XM and Sirius' approach to the merger, calling it "a media blitz for a political campaign."

Of course, there's no mention of the NAB and its unrelenting lobbying efforts - which include full-page advertising - to block the merger. If anything can be considered a "media blitz" it would be the NAB's attacks on Sirius and XM. But why would they mention NAB? That doesn't lend towards their agenda. Afterall, Sidak was commissioned by C3SR, which is disclosed at the end of the article, but the C3SR itself is "supported" by the NAB. Mentioning the NAB would just expose the hypocrisy, so Sidak/Singer opt toward referring to them as "merger opponents" instead. Far less incriminating.

There's other issues I have with the article.

Sidak and Singer talk about a "price freeze" being promised by Sirius and XM. But a "freeze" indicates that Sirius-XM have promised to not raise prices for a period of time. This is just factually incorrect. Sirius-XM have made no such promise, though they have said they are open to the idea. Sidak/Singer are twisting the concept of a multi-tiered/a la carte pricing plan as offering "price freezes" - indeed the term "a la carte" is no where to be found in the article (oops, apparently it does) - and they base a large part of their argument of the deal being anti-competitive on a price freeze.

"Of course, if they truly believed this argument, XM and Sirius would not need to offer to freeze their prices. Competition would keep those prices at competitive levels."

And then there's this:

"There is an established framework used by antitrust authorities to analyze mergers, which involves defining the 'relevant market' and assessing the power to raise prices within that market. Under that framework, it is clear that this merger has serious problems, so XM and Sirius have rejected that framework. Instead of offering credible evidence that terrestrial radio (or any other audio service) constrains the price of satellite radio, they have approached the government's merger review proceeding as though it were a media blitz for a political campaign."

Unfortunately, this argument falls flat on its face as well. The DOJ process is completely non-transparent. They actually take measures to make sure that even those being interviewed can't get a read on the DOJ's opinion (i.e., if they think you're pro-merger, they as anti-merger questions, and vice versa).

So how does Sidak and Singer know that Sirius and XM "have rejected that framework"? How do they know what "evidence" Sirius and XM have submitted to prove its part of a larger relevant market? The answer is, they don't These statements are complete assumptions, and the opinion of Sidak and Singer.

Just like it's my own assumption and opinion that Sidak and Singer are full of....

[Washington Times]

FCC chairman Kevin Martin increased his vocal fight for a la carte cable programming in a letter sent to several minority groups yesterday, arguing that it would actually assist poorer minority groups.

Martin cited a Nielsen study pointing out that the average cable subscriber was paying for 85 channels, while that consumer really is only watching 16 channels. (I wonder if the same applies for satellite radio?)

"Channel choice is increasingly significant to consumers as the number of channels included in expanded basic, and the corresponding price to consumers, has continued to skyrocket," Martin wrote. "Indeed, cable rates have more than doubled in the last ten years. Cable companies often point to the increased number of channels being offered as an explanation for the increase in prices. This explanation, however, ignores the fact that most of these channels are not actually being watched.

"While I believe all consumers would benefit from channels being sold in a more a la carte manner, minority consumers, especially those living in Spanish speaking homes, might benefit most of all," Martin said.

Consumers typically have to buy large, expensive blocks of channels to access Spanish-language channels, he said.

Martin's letter was sent to the Black Leadership Council, the Hispanic Federation, the Labor Council for Latin American Advancement, and the League of Latin American Citizens, among others.

Earlier this month Kevin Martin said he was "pleased" with the proposed Sirius-XM a la carte pricing plan.

While Martin's support for a la carte has been well known for sometime, this clearly shows his feelings that it extends past the issue of simply "price," and reaches the overall issue of diversity in media. Sirius and XM's proposed a la carte pricing plan can act as a springboard for a la carte in the rest of the media industry in my opinion. Not only setting a precedent, but can even be shown as a working prototype to cable companies that the business model can actually work.

The FCC has an opportunity here. I hope they don't just let it slip through their fingers.

[Fox News]
Thanks Squeaky Wheel!

If the FCC lets the merger of Sirius and XM move forward, Spanish-language broadcaster Entravision says the FCC should force the satellite radio companies to “relinquish their spectrum so that competition can be renewed.”

Entravision then offered to lead a consortium of terrestrial radio broadcasters to take over the remaining spectrum and to offer programming based on their individual "programming qualifications." In the name of competition of course.

But they don't stop there.

Entravision continues to "request" that in order to expedite the "resumption of competition" that Sirius-XM should be required to sell the terrestrial consortium the satellites, equipment and facilities of the of the SDARS license holders. At a depreciated value, of course.

"All of this is intended to promote competition," Entravision writes in their comment to the FCC. How noble.

[via Inside Radio]
Thanks Matt!

Read the full FCC comment after the jump...

Emmis Communications CFO Patrick Walsh, while at the Noble Financial Conference in Charleston, SC yesterday, was asked about the threat to terrestrial radio from satellite radio.

Walsh said that while he saw satellite radio as "competition" he did not consider it to have a "measurable effect." He cited other outlets such as the iPod and Internet radio as each being an additional "threat" to this company.

"We at Emmis have viewed the threat as being much more fragmentation from the iPod and Internet streaming and the fragmentation from media, whether it be YouTube or other media being delivered on the Internet just fragmenting peoples' time.

"Satellite radio doesn't show up in our diaries very often. The people that utilize satellite radio often toggle between AM and FM and satellite radio, and it really hasn't caused a measurable effect in our business yet. We reach hundreds of millions of people every day. Ninety-three percent of Americans listen to AM/FM radio every week.

"Satellite radio is a niche business focused on people willing to spend 13 dollars per month for the radio. Which for long-haul truckers or people who are advocates of a music format which may not reach a mass market - if you're a passionate Blue Grass listener in New York City - it probably makes sense for you.

"But I think they're still challenged. It's a challenging business model to launch a billion-dollar asset in space and try to build up a mass-market audience quickly. And with 15 million subs it's tough, which is why they're trying to get the merger done. In large measure they're trying to work with the government to solve a business model problem.

"So, it's not one that keeps us up at night. What we're working on is trying to offer compelling programming in a multi-platform environment to grow our business.

Patrick Walsh concluded by saying that satellite radio "is competition but I don't think it's the principal competition for radio going forward."

In essence, he's just define radio - and satellite radio - as being part of a greater audio entertainment market. Thanks Patrick, that was quite the compelling argument there.

[Radio Ink via FMQB]
Thanks Wes!

Today, the Federation of Southern Cooperatives/Land Assistance Fund (FSC/LAF) announced its support of the Sirius-XM satellite radio merger. The group filed a letter with the FCC, urging swift approval for the merger.

“Rural communities are consistently undeserved by the lack of diversity in programming that local terrestrial radio broadcasters provide,” said Ralph Paige, Executive Director of the Federation of Southern Cooperatives/LAF. “A merger of Sirius and XM will bring lower prices and increased programming choices to the over 20,000 rural member families of the Federation/LAF in twelve southern states.”

In its letter to the FCC, the Federation/LAF cited the benefits that “a la carte” options and other low-cost, bundled programming packages would provide for rural and minority consumers.

“Our members clearly benefit from the ability to select the programs that are most applicable to their businesses, families, and personal interests,” added Paige. “We are also encouraged by the commitments that Sirius and XM have made to enhance the diversity and breadth of programming for minority audiences.”

The Federation of Southern Cooperatives/Land Assistance Fund (FSC/LAF) is a service, resource and advocacy association for a constituency of 25,000 low income families organized into over 100 cooperatives in rural communities across the South. The membership is primarily African-American but also includes White, Chicano and Native American members.

An outgrowth of the Civil Rights Movement, the Federation was chartered in 1967 by 22 low-income cooperatives to help African Americans and poor people to produce a livable income and save their way of life.