Barrington Research analyst Jim Goss writes in a recent report that he feels Sirius Satellite Radio Inc. is "better positioned" than XM Satellite Radio Holdings Inc. to achieve profitability should the merger not go through.

"We continue to believe that the FCC will likely approve the merger, although the time frame remains unclear," write Goss.

Barrington adds that, "if the merger is blocked or the approval language contains unacceptable conditions, we would continue to favor Sirius as the better standalone operator." Goss said that Sirius is "better positioned" than XM "to achieve profitability in a shorter time frame with relatively less downside risk."

In a report on XM, Goss noted that, "In the event that this does not occur, we feel some risk would exist in the stock."

[RadioInk]

That's the basic thought that is being floated around on Seeking Alpha today. The long-winded article essentially comes to the conclusion that the delay in reaching a decision on the merger between Sirius Satellite Radio Inc. and XM Satellite Radio is a result of "the FCC's determination to establish its authority."

It's an interesting theory, though I'm not so sure that the rest of the article gives it much validity (it's filled with obvious statements). Here's the basic gist of it:

"...this publication continues to perceive this merger as arguably the defining moment for the current and future FCC. Any approval that fails to enforce the FCC's authority via significant conditions beyond those proposed by the companies will effectively result in the FCC being labeled a 'rubber stamp' regulator for years to come -- at least with respect to major license transfers."

In other words - from a 50,000 foot view - the FCC is hemming and hawing over this merger in a way to as to impose a sense of its authority.

Ultimately, M&A Research (the author of the article, who has historically been uber-conservative in their predictions over this deal), feels the FCC "will impose conditions which will force the companies to either submit to unwillingly or to reconsidering the combination altogether."

I don't know exactly how correct it is - but it's a curious thought to entertain. What's your opinion? Why do you think the FCC is taking so long?

[Seeking Alpha]

Public-interest groups Public Knowledge and Media Access Project want to make sure the FCC understands their position on the Sirius-XM merger in light of a recent letter from Chester Davenport the Managing Director of Georgetown Partners.

While they confirmed that they did indeed meet with Georgetown Partners, the groups reiterated that they "take no position with respect to [Georgetown Partners'] specific proposal that 20% of the merged XM/Sirius company's spectrum capacity be leased on an arms-length basis to an independent entity."

"This approach could be a useful supplement to, but not a substitute for, the 5% non-commercial, educational set aside," they state in their letter to the FCC.

Should the Federal Communications Commission determine that Georgetown's proposal is in the public interest, both Public Knowledge and Media Access Project support the minority-owned group's proposal to assist non-commercial, educational programmers.

Both Public Knowledge and Media Access Project have proposed that roughly 5% of broadcast capacity from a merged Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. be dedicated to non-commercial and educational programming, of which Sirius-XM have no editorial control.

Georgetown stated in its letter to the FCC that they would agree to the proposal to set aside 5% of their own capacity for non-commercial, educational  programming. Additionally, they stated that there might be "technical barriers" that would hinder this content from being delivered to a merged entity and proposed a plan to overcome these so-called barriers.

In the filing, the public-interest groups conclude:
"In the interest of clarity, [Media Access Project and Public Knowledge] wish to state that neither they nor any person or organization associated with them have requested or received consideration of any kind from [Georgetown Partners] or any person or organization associated with them in exchange for their willingness to submit this letter of support."

[View FCC Filing (PDF)]

Following their marathon of meetings with the FCC, Primosphere wants to make clear its position on the ownership of spectrum: they don't want to just lease spectrum, they want the spectrum licensed to them.

"Primosphere is not looking to 'lease' a portion of the DARS spectrum," the company writes in a recent filing with the agency. "Rather, Primosphere is asking that its pending application be granted in part so that Primosphere will be a licensee of the DARS spectrum. Furthermore, Primosphere hereby restates it proposal... to offer free DARS service."

According to the filing, if the FCC approves the merger between Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., Primosphere urges the agency to simultaneously license a portion of the DARS spectrum to the company.

"Primosphere's proposed free service will ensure that consumers have an alternative to the combined XM/Sirius," the letter concludes.

[View FCC Filing (PDF)]

Georgetown Partners, the minority-owned firm that analyzes FCC regulated markets "for opportunities to extend minority ownership and control," recently met with public interest groups to discuss set aside provisions of Sirius-XM spectrum, according to a recent filing.

The privately-owned firm, headed up by Chester Davenport (pictured), is asking the Federal Communications Commission to require that 20% of Sirius-XM's broadcast infrastructure be leased to a "independent new entrant."

In a letter to FCC Chairman Martin, Davenport outlined his meeting with public interest groups Public Knowledge and Media Access Project. Both groups have suggested to the FCC that 5% of spectrum from a merged Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. be dedicated for non-commercial, educational programming.

Georgetown Partners agrees that the proposals by Public Knowledge and Media Access Project (as well as its own) would indeed "benefit consumers and serve the public interest." But Davenport feels that there are "technical barriers" that would hinder this content from being delivered in the digital format and bandwidth necessary, according to the letter.

As a result, Georgetown laid out a plan to "further the public interest objectives" shared by the groups. They include:

• Georgetown will "accept delivery of the program streams" in an agreed manner
• Will "at its own expense" encode the programming into the required digital format
• And finally will "transport and deliver" the programming, along with its own programming, to the merged entity.

All costs for the acceptance, encoding, and delivery of programming would be graciously absorbed by Georgetown Partners, according to the letter.

Chester Davenport highlights that their plan would be to broadcast satellite radio programming to all receivers - subscribers or not - and so would further the objectives of Public Knowledge and Media Access Project.

"We estimate that today there are 36 million such receivers in the marketplace, of which roughly 50 percent, or 18 million, are not subscribed," writes Davenport. "Implementing any educational set-aside in this manner will double the potential audience for the non-commercial programming."

Finally, Davenport feels that the educational set-aside is separate and distinct from Georgetown Partners' own 20% proposal. But if both proposals are realized, Georgetown "will dedicate resources to make sure that the non-commercial educational uses become reality."

[Read the entire letter (PDF)]
Bonus: Listen to yesterday's Orbitcast Radio show featuring Public Knowledge co-founder Gigi Sohn where we briefly discussed Georgetown Partners' proposal.

Sirius Satellite Radio Inc. CEO Mel Karmazin told investors during yesterday's earnings call that if the Federal Communications Commission imposes conditions that are too harsh, then the company will not go through with the deal.

"If it turns out that the conditions are such that they are so egregious that they are not in the shareholders' or subscribers' best interest, then we will not do it," said Karmazin yesterday.

Echoing Karmazin's sentiment, Sirius CFO David Frear said Tuesday that the company is prepared to reject conditions that federal regulators might impose if they are deemed too restrictive.

"The company won't do anything - the company won't agree to a set of conditions that's going to adversely impact, and would not be to the benefit of, our current subscribers, our future subscribers, and our shareholders," Frear said. "It's all got to make sense."

Frear described the negotiations with the FCC as a "tortured path," first announced in February of last year.

"The FCC process is in many ways a political process," Frear said. "There is a well-worn tradition of exploiting, of opportunistic parties looking to exploit the regulatory process of the FCC for what is their personal gain.

"In a week, we'll be 15 months into this for what is honestly, in the broader media landscape, an incredibly unimportant public policy decision," Frear said.

Karmazin also expressed his frustrations to investors over the deal taking so long.

"We filed our application at the FCC over 400 days ago," Karmazin told investors. "It is almost 350 days on the FCC clock from when it was put on public notice. The FCC historically tries to review deals within 180 days.

"We share the reasonable frustration that many of our investors feel regarding the time it has taken," added the CEO. "We also share the outrage that some have expressed to me regarding press reports of opportunistic parties trying to take advantage of the process and extract value for themselves that properly belongs to Sirius subscribers and shareholders."

"I can assure you we will work with the regulators on any conditions they feel should be attached to an approval."

According to Orbitcast's count, it has been 420 days since Sirius and XM filed their application with the FCC.

A smattering of Attorneys General spent roughly 45 minutes on the phone with FCC Commissioner Jonathan Adelstein, on Wednesday, voicing their concerns about the merger between Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc.

According to a WSJ blogpost, Rob McKenna Washington State's Republican AG and Connecticut's Democratic AG Richard Blumenthal joined assistant AGs from 8 other states to press the commissioner to vote against the deal, or at the very least, place tough conditions on it.

They also expressed concern about the lack of an interoperable radio that would work with both services, as well as the "significant harms" that would result from "the loss of a direct competitor."

"The states further explained that the lack of an interoperable radio is emblematic of the licensees' disregard for competition and consumers and urged that the licensees should be required to make the intellectual property for an interoperable receiver freely licensable and available for manufacturers and standards setting bodies," wrote the Attorneys General in a recent ex parte filing.

"The attorneys generals have a number of serious concerns," said Adelstein sharing their concerns. "They have a feeling that the Justice Department did not pay proper deference to their concerns when it issued its opinion ... In this case, those concerns were dismissed and there was no proper audience given to the attorneys general."

"I think it is important that the FCC, after such dismissive treatment by the AGs, take extra consideration on the very legitimate concerns that the attorneys generals are raising," Adelstein told reporters.

When asked how he planned to vote on the merger, Adelstein said it would depend on how the deal was conditioned.

[View FCC Filings (PDF) via WSJ Deal Journal, Broadcasting & Cable]

Representatives from Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. continue to have meetings with the Federal Communication Commission, indicating that the process is moving forward (though, arguably at a snail's pace).

The meetings between the companies and the FCC, predictively, began to increase pace after the Justice Department's approval of the merger. Prior to the DOJ's announcement there was little activity between Sirius-XM and the agency in terms of meetings, according to FCC filings.

In April, the companies collectively held a total of five meetings with the Commission - one of which was done over the phone.

In this month alone there have been three meetings held at the FCC's offices, an early indication that talks between the two are increasing frequency - and possibly nearing an end.

Yesterday, representatives from Sirius and XM met with FCC Chairman Kevin Martin, Daniel Gonzalez, Catherine Bohigian, and Elizabeth Andrion. A prior phone meeting on Tuesday, was held between XM Satellite Radio (sans Sirius) and Amy Blankenship, Legal Advisor in Commissioner Tate's office. Last week, Sirius and XM met with Chairman Martin.

None of the recent filings have given any additional details other than that the companies have reiterated their positions and "urged prompt approval of the pending merger."

[View FCC Filings: 1, 2, 3 (PDF)]

FCC Commissioner Deborah Tate's office met with the Minority Media and Telecommunications Council (MMTC) on Wednesday, according to a recent filing.

Commissioner Deborah Taylor Tate and Amy Blakenship, Legal Assistant to Commissioner Tate discussed the merger of Sirius Satellite Radio Inc., and XM Satellite Radio Holdings Inc. even though MMTC has not filed comments on the merger.

This is where it gets interesting: MMTC said they do not have plans to file any commats this time "as the merger does not appear to have a direct, specific impact on minority ownership policy."

Regarding the proposal endorsed by Congressmen Towns (albeit, later retracted) to set aside channel space for leases for minority ownership, MMTC said that "the Commission should bear in mind the greater difficulty minorities face when leasing rather than purchasing assets. Therefore, the Commission should examine the specific terms of the proposal for longevity, uniqueness, and financial sustainability of the contemplated operation."

That's a very interesting take, and quite the departure from other minority groups who have presented in the past.

[View FCC Filing (PDF)]

Senior House Energy & Commerce Committee member Bobby Rush (D-IL) has backed out of a letter about the Sirius-XM merger he had co-signed to FCC Chairman Kevin Martin only the day before.

Rush, along with Rep. Edolphus Towns (D-NY), stated in the original letter that they had "fully supported" Sirius' and XM's voluntary commitment to dedicate eight channels for minority ownership.

In a separate letter a day later, Rush now says that he and Towns had a "miscommunication," and that while he advocates setting aside channels for minority ownership, he says eight channels aren't nearly enough.

"While I certainly believe it's important to dedicate channels for minority ownership, I do not believe a mere eight channels out of 300 total in the combined entity represents an 'important and realistic effort to address the dearth of minority ownership'," writes Rush.

"I firmly believe that XM and Sirius can designate far more channels than eight for minority ownership" he added, suggesting a number of channels closer to the 35% of the population that "people of color" represent.

While still a supporter of the merger, Rush says the 8-channel set-aside fails to satisfy his "advocacy for a more aggressive policy that emulates the real diversity of the American public."

[Broadcasting & Cable, Radio Ink]