A recent article in the New York Post isn't very forgiving of the Sirius-XM merger, dramatically (in classic Post-style) highlighting Mel Karmazin's salary and how it would be taken into account when considering the merger.

"Details of Mel's pay package couldn't have come at a worse time for Sirius and XM," said Sanford Bernstein analyst Craig Moffett.

"Their credibility is already stretched pretty thin on Capitol Hill after weeks of anti-trust grilling. This will add fuel to the argument that their merger attempt is a way to enrich management rather than listeners."

At least, that's fuel to the fire that the NAB would love to feed. The reality is that Karmazin's compensation was likely put into place in his original contract back in 2004 when he signed on to Sirius. But who needs reality when you've got drama? Check out this ridiculous quote from an NAB spokesman:

"This outlandish pay package confirms that the proposed monopoly Sirius-XM merger was crafted mainly to enrich the companies' CEOs and their close friends on Wall Street," said NAB spokesman Dennis Wharton. "The notion that consumers or small shareholders would benefit from a government-sanctioned monopoly is pure fiction."

Apples... meet Oranges.

The unfortunate thing is that regardless of how little this should affect the decision by the FCC and DOJ - Peter Lauria at the NY Post is absolutely correct... the negative attention this stirs up certainly doesn't help.

[New York Post]

XM Satellite Radio CEO Hugh Panero told analysts today that XM remains positive in their outlook for a merger with Sirius. “We continue to believe we will ultimately receive the necessary approval to continue with the merger,” Panero said.

Indeed, in response to the swarm of negativity coming from analysts about the merger passing regulatory muster, a spokesman for XM said after today’s conference call that other analysts are more positive.

He cited a report last week from the Washington Telecom, Media & Tech Insider, which retains former FCC chief of staff Blair Levin as an analyst. The report gave the merger better than a 50 percent chance of receiving federal approval.

The positive outlook from XM doesn't just come from the top. Internal sources tell me that the majority of people at XM feel the merger will go through. Something that Sam Litzinger from Washington Post Radio apparently has heard as well.

It's good to see XM keeping a chin-up even in the face of negativity. But there's still a business to run, and as Hugh Panero said at the earnings call this morning, "we continue to operate XM as very much a stand-alone company."

[TWICE]
Thanks MUSCLE13!

Three separate analyst's reports this week have cast serious doubt on whether the Sirius-XM merger will be approved by federal regulators.

Bank of America analyst Jonathan Jacoby put the probability of approval of the merger at about 35 percent, but noted that it was likely much lower. Meanwhile, Sanford C. Bernstein & Co senior analyst Craig Moffett, and William Kidd, media analyst with Wedbush Morgan Securities, put the chance of approval closer to 10 percent. 

Jacoby also lowered the merger synergy assumptions from $5 billion to $3.6 billion, stating that sports rights fees could increase initially.

"The merger faces a very tough road at the FCC, where the public interest test applied by the commission is inherently subjective," Moffett said. "In Washington, 'subjective' is codeword for 'political.' "

"The fact that there are different pricing schemes means you can effectively bake in price hikes," Kidd said.

"Regulators can see that's a problem."

[Washington Post] 

That's the question being posed by SeekingAlpha contributor M&A Researcher, as the FCC still has not started its review "clock" just yet.

They point out that there has been an unusually long delay from application filing to clock start, but given the magnitude and publicity surrounding the Sirius-XM merger, maybe it's not all that surprising.

No new filings have been posted to the FCC's transaction page in the last seven days. It could be an indication that the staff is preparing to launch the review clock shortly, or maybe that the volume of filings coming in is so large that the staff simply is unable to keep up.

Either way, another batch of ex parte filings can be expected to appear shortly, as can the beginning of the 180-day informal review period. Tick-tock.

[SeekingAlpha] 

Unsurprisingly, the Independent Spanish Broadcasters Association (ISBA) has joined up with their brethren, the NAB, to come out against the Sirius-XM merger.

Zee Ferrufino, a member of the ISBA board and the owner of KBNO 1280 AM in Denver, said, "Anything that's a monopoly will affect everybody. Not only Spanish broadcasters but any radio station."

And what of the chances of the merger going through?

"They are crazy," Ferrufino told The Denver Post. "I don't believe this is going to happen. Most people are against it."

[The Denver Post] 

With the CBS takeover rumor surprisingly still keeping warm, let's look at this from a theoretical standpoint. What if the timing is off? Maybe, like with most rumors, the overall concept is there but it loses out in the details?

Forget about a takeover while this merger process is underway, that would be too messy, but what if the merger is not approved? Sure, both companies have said that they would survive just fine without a merger, but we all know what would happen if it doesn't go through: the stocks would take a nose dive (more so than the already baked-in assumption by the Street that it won't happen).

So why wouldn't the merger be approved? Because regulators would buy the "satellite is its own little market" argument. And in turn there wouldn't be much in media ownership issues. If satellite radio is its own separate market, there's little in the way of a terrestrial radio company (any terrestrial company for that matter) scooping up one of the satcasters for itself.

Food for thought.

Looks like the NAB's hypocrisy is being picked up by the media now. Yesterday's Wall Street Journal features an article, What's the Frequency, NAB? that questions the NAB's motives behind opposing the Sirius-XM merger.

I really like this piece, mainly because it cleanly and clearly spells the whole situation out:

"No one knows whether the public will ever really take to the pay model, but it's not the role of the government to help the NAB smother a fledgling competitor in the crib. This appears to be a merger of desperation more than anything, and blocking it could well result in no satellite-radio providers and thus fewer listening options for consumers."

Oh, and aside from all that, I do relish in seeing the NAB exposed for what it truly is.  

[Wall Street Journal] 

Satellite Television
In the 1980s, the NAB fought the FCC's decision to award DBS licenses, claiming that the Communications Act forbade a nationwide licensee. The NAB's position was so extreme that a federal appeals court described the NAB as "luddite[s]," saying it would be irresponsible to deny consumers "new technology that offers the promise of substantial public benefit." The court also chided terrestrial broadcasters, commenting that "the Act does not entrench any particular system of broadcasting: existing systems, like existing licensees, have no entitlement that permits them to deflect competitive pressure from innovative and effective technology."
(NAB v. FCC, 790 F.2d 1190, 1197-98 – D.C. Cir., 1984)

"Drop-In" Stations
In the 1980s, the FCC issued a decision allowing the allotment of additional FM frequencies. The NAB and other broadcasters sought to have restrictions imposed on the operation of these so-called "drop-in" FM stations, which were made possible by technological improvements in radio receivers. The NAB also filed a petition for reconsideration of the FCC's decision to authorize the new stations.
(Modification of FM Broadcast Station Rules to Increase the Availability of Commercial FM Broadcast Assignments, 87 F.C.C. 2d 279, 1984.)

Low-Power Radio
The FCC first proposed the establishment of rules for low power radio service in 1999. The NAB and other broadcasters submitted comments vehemently opposing this new service. The then-FCC Chairman William Kennard said this opposition was "about the haves—the broadcast industry—trying to prevent the have-nots—small community and educational organizations—from having just a little piece of the pie. Just a little piece of the airwaves which belong to all of the people."
(Statement of FCC Chairman William E. Kennard on Low Power FM Radio Initiative, 2000 FCC Lexis 1536 – March 27, 2000)

Low-Power TV Band Devices
In 2004, the FCC proposed to allow certain types of unlicensed devices to operate in the broadcast television spectrum at locations where the spectrum is not being used. As the Commission explained, permitting such operations would enable "more efficient and effective use of the TV spectrum and would have significant benefits for the public by allowing the development of new and innovative types" of broadband devices. The NAB and other broadcast interests sought to impede the operation of these new devices, though they would operate only on channels not being used for licensed services. Even after the FCC issued a decision in 2006 authorizing the devices, the NAB and other broadcast interests asked FCC to impose an extensive set of restrictions on the operation of the devices.
(Unlicensed Operation in the TV Broadcast Bands; Additional Spectrum for Unlicensed Devices Below 900 MHz and in the 3 GHz Band, 19 FCC Rcd 10018 – 2004)
(See Joint Comments of The Association for Maximum Service Telelvision, Inc. and the National Association of Broadcasters, ET Docket Nos. 04-186 and 02-380 - filed Jan. 31, 2007)

Satellite Radio
From the start, the NAB vehemently opposed allocation of spectrum for and licensing of satellite radio, asserting that it would destroy local radio broadcasting. The radio industry’s evidence was embarrassingly thin ranging from studies that assumed satellite radios would be free, claiming that a temporary revenue fall-off during a recession was indicative of the declining fortunes of terrestrial broadcasters, to a survey of radio station executives, each of whom claimed that satellite radio would be the death of localism. Ultimately, NAB’s opposition delayed licensing satellite radio for seven years. Now the organization is looking to stop the Sirius-XM merger from going through, using any means necessary.
(Rules and Policies for the Digital Audio Radio Satellite Service, 12 FCC Rcd 5754, ¶ 19 - 1997)
(Reply Comments of CD Radio, at 29 - filed Oct. 13, 1995)

In an incredibly descriptive article entitled Dinosaurs vs. Satellites, senior editor Radley Balko paints a clear picture of the NAB's efforts to undermine the satellite radio industry.

From their consistent flip-flops in defining competition, to anti-satellite radio advertising (which, miraculously, has disappears from their website) to vehement protection of "localism" - we see the true colors of the NAB through this article.

One interesting thing I didn't know: "... the NAB lets members of Congress and their families record public service announcements in NAB studios free of charge. The commercials are then broadcast in the members districts on NAB stations, also free of charge. That's broadcast time politicians often have to pay thousands of dollars to reserve."

Wow.

[Reason Magazine] 

In response to the NAB taking out an ad quoting their own paid advocates' statements, here's my own faux print ad, highlighting the NAB's own contradictory statements about "competition" in the audio market.