The Reverend Jesse Jackson today at an FCC hearing on localism voiced his opinions on the potential competitive harms he feels could come to minorities should the Sirius-XM merger be approved.

"The proposed Sirius-XM merger would eliminate the potential of any meaningful competition in the satellite radio market, which would, in turn, permanently block the potential for diversity of ownership and control by minorities in the only medium capable of nationwide broadcasting," said Jackson.

Jackson continued, "I urge this commission to view this proposed transaction - as it is currently structured - not in the public interest. It will eliminate diversity of content and meaningful opportunities for minority partnership in media ownership. This cannot happen. This commission must uphold the statutes and regulations that promote content diversity and opportunities for media ownership by minorities."

"The commission should seize the opportunity presented by this transaction to make a difference that serves the best interests of all concerned: Sirius and XM in their objectives, the marketplace and diversified ownership and competition, and the public's right of access to benefit from varied programming that is appropriate and feasible," Jackson continued.

"The proposed transaction would result in the business combination of the two most significant and largest companies in satellite communications. In effect, this creates a monopoly, virtually making competition impossible and programming dangerously subject to the combined entity's self-interests and whim. This puts the public at a disadvantage. It has the potential of serious economic havoc on any business attempting to be a part of this marketplace and to the communities of which these businesses serve," said Jackson.

This is in direct opposition to the opinion of the NAACP, which came out in favor of the merger earlier this year, stating that a merged satellite radio company would "strengthen its commitment to diversity."

As we near the final stretch of this high profile merger, it looks like things are really starting to heat up.

[Radio Ink]

Glass, Lewis & Co., a leading independent proxy advisory firms, has recommended that stockholders of XM Satellite Radio Holdings Inc. (XMSR) and Sirius Satellite Radio Inc. (SIRI) vote "FOR" the companies' merger proposals.

According to Glass Lewis's analysis, "the transaction is fairly priced and will yield substantial cost synergies for shareholders of both companies." As a result, Glass Lewis believes that the "proposed merger is in the interests of shareholders of both companies."

I'm not a shareholder of either company (never have been, never will be), but I know a lot of you are. So I'm curious, how will you vote?

This might very well be the last quarter that we will be comparing XM and Sirius subscriber numbers, as two separate companies at least. So, let's get to it before time runs out and we're forced to hold hands and sing Kumbaya together.

And because pictures are much easier to look at than a matrix of mind-numbing digits, here's some charts to help us along.

Total Satellite Radio Subscribers

• Sirius Satellite Radio: 7,667,476
• XM Satellite Radio: 8,570,000

In other words, Sirius is currently where XM was in 4Q06 (~7.6M). In the 2nd-quarter of this year, Sirius was where XM was in 3Q06 (~7.1M).

Remember, there's a seasonality in retail which historically sees a spike in Q4. So this may not be a fair comparison. The killer question is whether either company has the momentum to have a stellar holiday season this year to make a difference. So far, the signs have not been encouraging.

Quarterly Net Subscribers

• Sirius Satellite Radio: 524,938
• XM Satellite Radio: 315,000

Quarterly Gross Subscribers

• Sirius Satellite Radio: 999,284
• XM Satellite Radio: 952,000

Since gross subscribers scrubs out the effects of churn, and evens out other factors like including together promotional/non-promotional subscribers, here we can gather a better sense of market penetration. So I really do like to look at gross subscribers over net subscribers when looking at how both are performing.

Again, we see that in 4Q06, there was a tipping point where Sirius now leads XM consistently in gross subscriber additions.

Here comes another round of public support from Capitol Hill, this time from Senators John Ensign (R-NV) and Jim DeMint (R-SC).

The Senators have both praised Sirius and XM for the programming packages and a la carte pricing plans. DeMint stated that "these options will give American consumers more control over the programming they pay for.”

I'm still curious to know why there's this increased support from politicians who have previously remained silent. But for merger advocates, the political pressure is obviously quite welcome.

"Sirius and XM have responded to the market’s desire for more choice, and we applaud them for voluntarily offering subscribers new and innovative listening options. We are particularly pleased that they will offer family-friendly options that allow subscribers to block adult programming,” added DeMint.

"This is a great example of how private industry can and will respond to the demands of consumers without the need for government intervention," said Ensign. "We hope that other entertainment providers will follow XM-Sirius’ lead and offer Americans increased choices and customization."

[XMmerger.com]

Eleven members of Congress voiced their support for the Sirius-XM merger, in a letter addressed to FCC Chairman Kevin Martin.

The letter was signed by:
Rep. Sanford Bishop (D-GA), Rep. Corrine Brown (D-FL), Rep. Yvette Clarke (D-NY), Rep. Danny Davis (D-IL), Rep. Eliot Engel (D-NY), Rep. Ralph Hall (R-TX), Rep. Alcee Hastings (D-FL), Rep. Carolyn Maloney (D-NY), Rep. Greg Meeks (D-NY), Rep. Bobby Rush (D-IL), and Rep. Edolphus Towns (D-NY).

"...the merger of Sirius and XM will create new opportunities for this type of diverse programming that has been overlooked by terrestrial-radio broadcasters. This merger will allow the companies to offer even more diverse content by consolidating programming and better utilizing capacity to offer even more unique and diverse programming to currently underserved populations."

The timing of this is interesting.

The NAB came out with their own Congress-backing letter to the FCC many months ago. Meanwhile, Sirius-XM lately have seen momentum build on Capitol Hill with support from various lawmakers. Is this a calculated "killing blow" tactic? Or did it just take them this long to garner this level of support?

[Read the letter here (PDF)]

They're not done yet.

The Carmel Group, commissioned by the NAB, has released yet another "ping-pong" chart to show that Sirius and XM directly compete with each other.

A follow-up to an earlier study by The Carmel Group, this features a more in-depth "ping-pong" chart than before with a huge list of competitive actions and reactions between the two companies.

The study asserts that "without this continued competition, consumers will not be able to obtain substitutable competition from competitors within the all-important vehicle; and importantly, choice, competitive pricing restraints and service will undoubtedly - and significantly - suffer."

And of course, NAB spokesperson Dennis Wharton had his pom-poms in hand with this to say:

"Contrasting XM and SIRIUS's history of competitive behavior with their track record of abusing FCC rules, the central question remains: Should two fierce competitors with a demonstrable record of FCC rule-breaking be rewarded with monopoly power? We -- along with consumer groups, minority organizations, antitrust experts and more than 80 members of Congress -- think the answer is no."

Following the April study release, I discovered an earlier article written by The Carmel Group that was not commissioned by the NAB which stated that satellite radio's "competition comes in the form of traditional analog AM & FM radio, as well as burgeoning services like MP3 players, terrestrial radio, and video- and Internet-to-the-vehicle." This was, in my opinion, a completely opposing position from the NAB-commissioned study. A point that caught the attention of the New York Post.

Now The Carmel Group is back with an extended "ping-pong" chart to prove that Sirius and XM did indeed compete with each other.

But, so what?

Proving that Sirius and XM compete(d) with each other has little to do with disproving that they are part of a broader relevant market. If two radio stations in a single market compete with each other, does that mean that they don't compete with other radio stations in the same market? Of course not.

Further, observing the competitive responses between those two radio stations won't give us any insight into the "continuing proliferation of outlets and rapid pace of technological change in the media marketplace" that the NAB is so worried about.

So all the "ping-pong" charts in the world are simply just exercises in futility.

[The Carmel Group Study (PDF) via AllAccess]
Thanks Derek!

I'm busy taking apart the Arbitron ratings from earlier this week for another post I'm preparing, and found this to be interesting so figured it should be its own separate post.

Before we get into it, I want to highlight that I feel the Arbitron ratings are way off. Meaning that the cume and AQH absolute numbers are selling the satellite radio industry way too short. The full reasoning for this will be explained in this separate post I'm working on, but it's important to bring that to light here.

But if we ignore the numbers, I think we can find a level of accuracy in the proportions from the Arbitron satellite radio ratings. Meaning that the listener trends are probably more or less what Sirius and XM are seeing internally. I don't think it's a stretch of the imagination (regardless what side of the fence you're on) to get that Howard Stern leads in listenership.

And that's actually the interesting part...

Below you'll see a visualization of the cume listeners of both Sirius and XM. Note that both graphs are on the same scale for a nice clean comparison. But again, it's not the numbers I'm talking about, it's the behavior of one set of listener to another.

The spikes on the left represent two main channels for each respective service, Howard 100 (cume: 1,225,100) and Top 20 on 20 (cume: 1,055,300). After that, the drop off occurs very rapidly - Sirius Hits 1 is about 50% of Stern's cume; and Flight 26 is about 70% of Top 20 on 20.

Here we see a very interesting distribution between the two services.

Sirius' scale is very heavily weighted on Stern, while XM's is more evenly distributed throughout the channels. Pay attention to the fact that Arbitron's numbers measure across 171 channels for XM and 132 channels for Sirius, which actually amplifies XM's spread because it has a longer "tail" than Sirius.

"Howard is why Sirius is where it is today," says Tom Taylor, editor of radio-info.com told David Hinckley. These graphs exemplify that.

A few things can be inferred from looking at this:

1. Stern has done a great job at attracting listeners to Sirius, because that's their main point of interest.
2. There's a large number of Sirius subscribers that only listen to Stern (and only Stern)
3. XM's broad appeal among its subscribers is heavily weighted on its music

There's also some dangers associated with this info, for both services:

1. If Howard gets hit by a truck, or loses his voice, Sirius will have a very big problem.
2. XM faces very heavy competition from iPods and other music sources

Again, I'm not focusing on the raw numbers, because I feel Arbitron's methodology for gathering this info is flawed. But, much like Alexa numbers, the overall trending or proportions of the numbers might be accurate enough to give a level of insight we have not seen before.

What's your take on it?

It's almost not worth posting about retail sales anymore. It's just badnews over and over again. NPD Group's September 2007 data shows satellite radio retail sales fell 30% when compared year-over-year.

The sad part is that last year was actually an easy comparison. In September 2006, year-over-year retail sales were down 16% from 2005. So that just throws salt on the wound for an additional 30% decline last month.

The Quick Glance:

• Sirius September 2007 Retail Sales:
  Down 25% YoY
• XM September 2007 Retail Sales:
  Down 38% YoY

Marketshare:

• Sirius September '07 Retail Marketshare: 65%
• XM September '07 Retail Marketshare: 35%

It's the same story again: Sirius pummels XM in terms of retail sales. Only this time, Sirius really pummeled, as XM has reached its lowest point in retail marketshare for the entire year. But there shouldn't champaign popping over in the McGraw Hill building, because being the big fish in a shrinking pond this isn't cause for celebration.

Something really needs to be done to reinvigorate retail. I know, I know, OEM is the future, but that doesn't mean that retail needs to be ignored.

After seeing continued landslide in July's NPD data, I mentioned that three obstacles lie in the way of retail sales growth: Installation, Perceived Complexity, and Value Proposition. These obstacles still exist, and there needs to be a concerted effort to bring satellite radio retail sales out of its doldrums. Because to just sit and watch this decline continue is simply ridiculous.

Five organizations representing rural Americans from across the country voiced their support for the merger of Sirius and XM in a joint letter sent to FCC Commissioner Jonathan Adelstein.

The Federation of Southern Cooperatives/LAF and League of Rural Voters (who had previously filed comments with the FCC in support of the merger) were joined by three new groups: National Latino Farmers and Ranchers Trade Association, Intertribal Agriculture Council and Oklahoma Black Historical Research Society Project, Inc.

In their letter to Commissioner Adelstein, who himself is a South Dakota native, the groups list a number of consumer benefits for rural America that would result from a merger of the two companies:

"This merger is clearly in the best interest of rural consumers because it would allow a combined company to expand upon its existing services with increased efficiencies, and at the same time provide rural listeners with more diverse programming and lower pricing."

"A merger of Sirius and XM will make satellite radio a more viable option for rural consumers... even in the most remote areas," they added.

It's interesting to see Adelstein being the focus in this letter, being the only other Democrat on the FCC next to Copps. Commissioner Copps has expressed his doubts about the Sirius-XM merger, as well as about media consolidation in general. Adelstein historically has joined Copps in his opposition to media consolidation as well, a point he made very clear in his statements (PDF) regarding the FCC's 2003 review of Broadcast Ownership Rules.

However the rural groups don't ignore this point, concluding their letter with:

"Furthermore, the rapidly increasing homogenization of programming on terrestrial radio is leaving rural listeners at a disadvantage. Terrestrial radio broadcasters once provided rural listeners with a variety of local programming options that were tailored to individual communities. A merger of SIRIUS and XM will make satellite radio a more viable option for rural consumers by drastically increasing programming options, even in the most remote areas."

Read the full letter here (PDF).

The Arbitron ratings have really caused a stir, which is not surprising since this is the first time we've seen any public ratings of any kind for Sirius and XM.

And of course, usual suspects are jumping all over it. This from Inside Radio:

Howard Stern then: 20 million listeners. Today: 1,225,100.
That's Stern's weekly cume according to Arbitron's first-ever report detailing listening to XM and Sirius. It shows his $500 million contract with Sirius buys the company an average 96,700 listeners in any given quarter hour. While his audience is just a fraction of what it once was, his "Howard 100" channel is satellite radio's top-rated, delivering more listeners than any other channel.

Now I'm not going to say it's "unfair" to compare satellite radio ratings with terrestrial ratings, but I am going to say that the comparison is useless. It's not about listeners, it's about subscribers.

That's part of the benefit of satellite radio. Not being dependent on ratings and constantly trying to boost your cume/AQH/TSL gives broadcasters artistic freedom and allows them to drop the gimmicks. That's part of the reason why the best broadcasters from terrestrial have made the jump to satellite.

And that's part of reason why we all subscribe, because the B.S. of regular radio - which is ultimately meant to drive ratings - is not prevalent on satellite radio.