Despite a report from Bear Stearns analyst Robert Peck, who predicts that a DOJ decision could arrive as soon as today or Monday, Bank of America analyst Jonathan Jacoby advises clients to remain "cautious" - deal or no deal.

Jacoby has remained as the devil's advocate throughout the merger proceedings, which is a good thing because it helps keep some of the more irrationally exuberant investors grounded (to a degree). Historically he's been very skeptical of the merger prospects (putting chances of approval roughly around ~30%). The interesting thing in his most recent research note, though, is that Jacoby does not dispute what Peck is reporting.

Much of the Bank of America analyst's conclusions have been based on information from DC contacts, but we don't hear about them in this note. Instead, Jacoby brings to light the high hurdles that XM-Sirius need to overcome to get approval (and there's no denying that this isn't your rubber-stamp kind of merger). If the deal is not approved, he points to significant downside. And even if the deal is approved, he feels there's not much upside.

"However, we are not ‘naïve.’ We think investors will most likely run these stocks post-merger approval," Jacoby notes.

To me, it's a significant development when the naysayers stop saying "nay."

Peck and Jacoby have been on two sides of the coin for this merger. With no significant information coming from BofA's sources disputing the information of Bear Stearns, well, I'd say that's pretty telling.

A decision by the Department of Justice on the merger between Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. could come as early as today or Monday, according to an analyst note issued this morning.

Bear Stearns analyst Robert Peck issued a research note this morning stating that a decision by the DOJ is imminent. According to Peck, conversations with their contacts in DC suggest that a DOJ decision could come as early as today or Monday.

Further, the Bear Stearns analyst believes that junior staffers at the DOJ are recommending blocking the merger, but that higher officer deputy officials likely disagree with the junior staff recommendation. The analyst expects Tom Barnett likely will rule along with the higher officials and announce that the DOJ will not be blocking the deal.

This is consistent with a Cowen & Co. note issued earlier this month, which also said that Antitrust Chief Tom Barnett is likely to approve the deal, "despite a staff recommendation against the deal."

Bear Stearns' Bob Peck also feels that the FCC has been coordinating its actions with the DOJ, and that an FCC decision will likely come near this year's end.

Whoopi Goldberg's syndicated morning show "Wake Up With Whoopi" has been dropped from Clear Channel's WKTU/New York. I guess star-power isn't enough to make it in the #1 radio market (just ask David Lee Roth).

New York Daily News reports that a memo was circulated around the KTU staff late Tuesday saying the station would no longer be carrying the show as of yesterday morning.

Whoopi's show launched in late July 2006, and while it's still in syndication (her site lists 9 affiliates), "Wake Up With Whoopi" is now gone from its flagship station in the leading radio market.

This brings back the roaring debate about Celebrity-ism versus Radio Talent. It's not much of a debate actually, since this is proof positive that it actually takes a lot of talent and effort to be a successful on-air host - especially when it comes to terrestrial radio.

Tom Taylor of Radio-Info is quick to point this out in his recent newsletter:

"Politicians, entertainers, TV stars, businesspeople, professionals – they’ve all thought 'Hey, I can do what Rush Limbaugh does, or Howard Stern, or Sean Hannity, or…' And mostly, they’ve been wrong."

That's not to say that famous-folk can't possibly be good on-air hosts, there's a few that have made it, but to build an audience in talk radio takes a lot of time. And the ever fickle terrestrial radio industry is constantly in seek of "hits." There's no time to experiment, take a gamble, and try something new (maybe that's why regular radio sounds the same since the '90s?).

So why is that celebrities have seemingly found a home on satellite radio?

Martha Stewart, Oprah, Eminem, Snoop Dogg, Barbara Walters, Bob Dylan, Richard Simmons, Dale Earnhardt Jr, Tony Stewart, Cal Ripken Jr., Tiki Barber... the list goes on and on. Celebrities span the entire channel lineup on both XM and Sirius.

And while I'm not one to say definitively whether these celebrities are good at hosting shows (some of abysmal in my opinion), they do seem to hold a higher success rate than on terrestrial radio. The difference being, I think, that on satellite radio: it's not all about the ratings, it's all about the subscribers.

Celebrities on satellite radio are like mannequin displays at a store. Or those big posters of half-naked people frolicking with each other at Abercrombie. There's no chance in hell you'd actually wear what you see, but it gets the target demographic through the door.

That's the function on the celebrity. They create a level of familiarity with the product. "Oh, I like 50 Cent! I guess I'll get Sirius." "I'm a diehard Bob Dylan fan, so I'll sign up with XM."

And once you're through that door, you experience the rest of the service. You fall in love with a show that you otherwise wouldn't have listened to. Take Ron & Fez for example, by far one of the best kept secrets on XM. Incredibly funny, snarky, smart and entertaining all at once. But you have to give the show a chance to set in with the audience.

Another example is "Whatever with Alexis & Jennifer," which by the traditional formula should be a complete trainwreck. Still, for having absolutely no radio training whatsoever, these two deliver a surprisingly high quality and entertaining show. They have the drive and put in the effort, which is apparent on the air. But again, there needs to be a chance for people to experience that.

So bringing to back to Whoopi. Her show is (was?) personable and funny and worked hard at it, but for Clear Channel, it just didn't bring the "hit" that they needed. That's money on the table for them. Ad dollars that are disappearing as she (and the industry) struggles to gain traction in an increasingly fragmented audience.

The moral of the story: Whoopi, maybe you should've gone to satellite radio. Instead of failing to become a "hit" you could have become one of those secrets that people fall in love with.

A devote audience is better than none at all.

[via FMQB]

Just in case the Federal Communications Commission wasn't already aware of it, the Sirius-XM camp has filed an ex parte filing highlighting the NAB's dubious tactics for garnering "support" for their cause.

The counsel for Sirius Satellite Radio Inc. says little else in the filing beyond simply linking to the Washington Post article, but that's really more than enough for them to do. It's better to put the issue on record and let it speak for itself.

It still boggles me that the NAB needed to resort to these "inspirational" tactics so as to generate 8,500 form-letters, when they advocate on behalf of 8,300+ radio/TV stations and networks.

John Gorman said it perfectly in a recent blogpost:

"Is this how your NAB members want their money spent? Is this the image the radio industry wants or needs right about now?"

I would wager to say the answer is a resounding "no" and the NAB will have a lot of explaining to do once this is all over.

[Ex Parte filing (PDF) via SiriusBuzz]

Wall Street Journal editorial board member Jason Riley talks with Sirius CEO Mel Karmazin and XM Chairman Gary Parsons about their merger plans.

Check out the video below (Email/RSS folks might need to click to watch):

Representative Rick Boucher (D-VA) wrote a piece that ran in both the Washington Times (yesterday) and a similar piece that ran in BusinessWeek (a week or so ago).

In both, Boucher dismisses antitrust concerns by building a case as to why satellite radio is part of a greater "audio entertainment" market, and argues that the Sirius-XM merger would benefit listeners.

"At first blush, one might conclude that a combination of the only two providers of this satellite-based service would be an obvious antitrust abridgement. In fact, the 'bumper sticker-like' campaign of merger opponents stresses the harm of a 2-to-1 combination.

The reality of the relevant market, however, is both more subtle and more compelling."

I think that's the basis of this entire argument. Whether you consider satellite radio to be within its own silo, or whether you feel that satellite radio directly competes with other audio mediums.

Rep. Boucher addresses this debate in his piece, talking about his view of the competitive landscape:

"[Regulators] often ask, 'How far would a person have to drive in order to find a substitute?' In the case of XM and Sirius, consumers don't have to drive anywhere to find a competitive alternative: They just have to hit a different button on their car stereo."

It's that ease of switching between audio mediums that, in my opinion, is the biggest case for the merger. And ultimately, it's what protects the consumer from a combined company abusing "monopolistic" powers.

Aside from the argument about whether or not a merger would create a monopoly (which has been discussed here ad nauseum), I think it's great to see Sirius-XM getting this level of public political support. The NAB is quick to point out that they got X number of Congressmen to sign a document, but there's little in public support coming from those in Capitol Hill for their cause.

[BusinessWeek, Washington Times]

Consumer advocacy groups today urged the Federal Communications Commission to reject the proposed merger of satellite radio providers XM and Sirius, saying the deal would eliminate competition and negatively impact consumers.

The groups - which include the Consumer Federation of America, Consumers Union and Free Press - filed a report Monday stating that the estimated $5 billion deal would reduce the number of channels and formats available and result in little cost savings.

"The proposed XM-Sirius merger is not in the interest of American consumers," said Dr. Mark Cooper, director of research for the Consumer Federation of America and lead author of the report.

"Leaving one company to monopolize the satellite radio industry would result in higher prices and fewer choices -- with no foreseeable public benefit."

The report - which claims to not "restate the case against the merger" but rather "focus on new data introduced into the record" - says the Sirius-XM merger would have negative side effects for both consumers and for the satellite radio industry. They feel that the deal would reduce the number of channels and formats available, result in fewer cost-saving incentives, and cause a dramatic drop in spending on talent and retail.

The groups say the companies have not made a sufficient case that the FCC should end its explicit prohibition on mergers between satellite licensees.

[Read the FCC Filing (PDF) via The Hollywood Reporter]

Yesterday, the Thanksgiving Day post lightly touched upon what the Washington Post uncovered recently: that many of the "comments" submitted to the fcc against the Sirius-XM merger were simply generated through a dubious pop-up ad campaign.

This issue goes far beyond the use of form letters. I'm no lawyer, but this appears to border on all out fraud.

Form letters can be a "useful" tool for large groups to assemble their thoughts en masse. I don't necessarily like them (I would much prefer the public submit in their own words), but at least the submitter is voicing their opinion and is aware of it.

But what the NAB has done here is not at all a case of "form letters."

The Washington Post discovered that out of the 60 people they contacted - many of the phones were actually disconnected, or went unanswered. Out of the 10 people they were actually able to talk to (which - in itself - is a ridiculous rate of failure), only 1 person - ONE PERSON - even remembered filling out something remotely related to satellite radio (and not even being merger related).

So how did those comments get submitted to the FCC?

According to the Washington Post article, the NAB bought pop-up ads on websites like CarMax.com, Staples.com and PriceGrabber.com in August and September. The ad ran the headline, "The XM Radio/Sirius Merger will create higher prices. Stop the Monopoly!" - and users could click either, "Yes, I'd like to help stop the monopoly" or "No, thank you."

Those who clicked "yes" were asked to type in their contact information and later received a confirmation e-mail "detailing their action and providing a copy of the letter to be sent to the FCC," according an NAB spokesperson. Respondents were given the "opportunity to opt out of the process" and cancel submission of their letter.

If I'm reading that correctly... it means that any inaction to the email was considered confirmation. So if these emails were sent to the Spam folder, or were inadvertently deleted, the submission was still considered confirmed.

And there's another question...

So far only a little over 5,000 computer generated emails have hit the FCC and, as the article points out, many with the names and addresses of people who said they never filed any comments regarding the merger. But the NAB states in the article that 8,500 comments were "inspired" by this campaign.

That means some 3,500 more "comments" with dubious provenance are waiting to appear. Where are they? When will they show up? Why have they been withheld?

I don't care if you're pro- or anti-merger. If you have an opinion on the merger - whatever it may be - you should have submitted your comments to the FCC. That is your right as a citizen, and it's the whole purpose as to why the FCC has a public comment submission process.

These phony letters corrupt this entire process and are in sharp contrast to the thousands of Americans who took time to write genuine, thoughtful letters to the FCC.

The fact that the NAB - which advocates on behalf of over 8,300 radio and television stations and networks, and has an annual NAB Radio Show which reportedly is attended by over 110,000 industry professionals - simply cannot garner enough genuine public support for their agenda is telling. Very very telling.

But just because the public isn't agreeing with a lobbyist's position doesn't mean they should resort to these tactics. It is the public who should decide how to voice their opinion, not a special interest group.

A Call To Action:

The more I think about this, the more angry I get. Again, we're not talking about form letters (which, sadly, is a standard lobbying practice) - I'm talking about people participating as part of a legal process without knowing they are. In the Washington Post article, it was pointed out that a poll of 350 congressional staffers conducted by the Congressional Management Institute in 2005 indicated that half of them did not believe that form-letter messages were sent with the knowledge or approval of constituents.

How long has this been going on? How many other comments from "the public" aren't genuine? How exactly are all these comments being extracted, especially considering WaPo's astonishing rate of failure in contacting submitters? Are these in fact even real people?

We need to ask Congress and the FCC for an inquiry. There needs to be some accountability here.

Regardless of whether you support or oppose the merger, we need to know the extent of these practices. How exactly were these comments were "inspired" by the NAB? If you feel the same way as I do, then please voice your opinion and contact Congress/FCC to demand an inquiry.

There's several ways to do this (like, contacting the FCC directly or check out the EFF's guidelines for contacting Congress). XM and Sirius also have handy-dandy pages that submit your comment to the FCC and copy your state's representatives (here's XM's version, or Sirius' version - they both do the same thing).

However you do it, just remember this issue is not about the merger itself, rather an inquiry into these deceitful and dubious tactics. Those of us who's actually spent the time to submit a unique and thoughtful comment shouldn't be undermined by a pop-up ad.

Have a Happy Thanksgiving everyone!
...and in between naps after gorging yourself with food today - check out this Washington Post article about the form letters reportedly generated by the NAB and subsequently submitted to the FCC.

The Washington Post has contacted several of the people - who's names are now on record as supporting the NAB's political agenda - and many of them had no idea that they would be submitting comments to the FCC.

"No sir, I never sent any notes to Washington," said William Chadwick, a retired truck driver from Lebanon Junction, Ky., whose name is attached to one of the messages that reached the FCC. "This call is the first time I've heard of this."

"I never sent an e-mail," said Frank Dashields, a Salisbury, Md., building-services manager. "I don't even know about the issue."

"I don't know what the merger is about and I don't care," said Tom Biniecki, a retired steel worker from Winamac, Ind. "I have no idea what you're talking about."

Apparently the form emails (which you can read more about here) were sent to the Commission after people clicked on an ad that read, "The XM Radio/Sirius Merger will create higher prices. Stop the Monopoly!" The ad invited users to choose either, "Yes, I'd like to help stop the monopoly" or "No, thank you."

It's an incredible article, and one that speaks volumes of the NAB's tactics. Well worth the read.

[The Washington Post]
Thanks to everyone who sent this in!

The FCC has issued a second Protective Order to ensure that prying eyes do not see "highly confidential and competitively sensitive documents" coming from Sirius and XM.

In the beginning of this month, the Commission asked for additional information in regards to the merger. Later that week, Sirius and XM stated that there are certain documents and information related to the request which constitute some of their most sensitive business data, releasing them would place the companies at a significant competitive disadvantage.

As a result, the FCC has issued a Second Protective Order. Anyone who wants to gain access to these sensitive documents must sign an Acknowledgement of Confidentiality.

Today is the due date that Sirius-XM needed to have all of their documents submitted to the FCC.

[FCC Protective Order (PDF)]