Jimmy Schaeffler, Senior Analyst and Chairman for the Carmel Group, is quoted in The Denver Post as saying that a satellite merger makes "a ton of sense."

Now mind you, he's not talking about Satellite Radio... he's talking about Satellite TV (DBS). But that's precisely my point.

"All of a sudden with the telcos involved, you have competition," said Jimmy Schaeffler, senior multichannel analyst for the Carmel Group. "It (a merger) has always made a ton of sense. ... Look at the billions they spend in redundancies."

Note that The Carmel Group has said they have a record of opposing mergers that they deem as "anti-competitive" such as the proposed Sirius-XM merger. They point to their similar opposition to the DirecTV-EchoStar merger as an example of their historical stance.

The DirecTV-EchoStar merger was rejected just 4 years ago. And in this increasing fast-paced media environment, a lot can change in those four years.

Verizon is aggressively rolling out its FiOS TV service, and now has around 500,000 customers. AT&T's U-verse service has more than 40,000 customers in 23 markets. These are two companies that have a massive existing consumer base that they can easily upsell these new services to. With the telcos involved, Schaeffler now appears to see viable competition for both satellite and cable TV providers.

And that's video based services.

Audio services require far less bandwidth, and so the barrier to entry is much lower than video. Take a look at Muzak and DMX - and soon Slacker - who all utilize existing satellites to broadcast their audio content. A company doesn't need to launch satellites to be a satellite player. (That's ignoring the IP-based services from mobile providers... and is there really any difference between 1,300 HD Radio stations and DARS repeater towers?)

My point is that The Carmel Group took the position of opposing the EchoStar-DirecTV merger using the same short-sighted logic that they're applying to the Sirius-XM merger. (Let's not forget: they also took a completely different position on "competition" in a non-NAB commissioned report.)

So what happens in the years to come?

[The Denver Post] 

In an interview with The Washington Times, Sirius CEO Mel Karmazin said that XM Satellite Radio's Washington, DC headquarters will remain post-merger.

"It was very important for XM to continue, after the merger, to be headquartered in Washington, D.C.," Mr. Karmazin said.

XM's Eckington Place headquarters, fondly referred to as "The Eck" by those in the biz, is the work-place home to some 800 employees. The restored printing factory is also cheap compared to Sirius' rent at Rockefeller Center in NYC.

"We've even said we won't have less employment here in the District than we already have," Karmazin added.

That statement should cause a sigh of relief for many XM employees, but the fate of Sirius' headquarters (and employees) is still something of a mystery. The name of the merged company also remains up in the air.

[The Washington Times]
Thanks Robert!

An extremely influential group has today announced its support for the Sirius/XM merger: the NAACP.

The the nation's largest and most widely-recognized grassroots civil rights organization, the National Association for the Advancement of Colored People (NAACP) today has officially endorsed the pending merger.

"We are extremely pleased to enjoy the support of such a well-respected and influential organization in the African American community," said Gary Parsons, Chairman of XM Satellite Radio and Mel Karmazin, CEO of Sirius Satellite Radio, in a joint statement.

In a letter to the FCC, NAACP Director Hilary Shelton affirmed, "We are convinced that the pending Sirius-XM merger will be a positive development for consumers. More diverse, accessible and appealing options at lower prices in satellite radio will help further expand the reach of this medium."

The NAACP also applauded both companies for maintaining "a strong commitment to diversity" and utilizing "significant resources to recruit and retain minority talent and leadership at all levels." Both XM and Sirius offer several music and entertainment channels (like XM's The Power (ch 169) and The Foxxhole (ch 106) on Sirius) which cater to the diverse tastes of African-Americans.

"We have no doubt that a merged satellite radio company would continue, and in fact, strengthen its commitment to diversity in employee recruitment and retention, while expanding its pool of diverse contractors and vendors," added Shelton.

While there have been a wave of groups supporting the merger, none have the level of recognition that the NAACP and its membership of over 400,000 nationwide holds. This is a huge achievement for merger supporters.

Harold W. Furchtgott-Roth, a prominent economist and the former Commissioner of the FCC, released a study today exploring the economic considerations that government agencies should take into account when reviewing the proposed XM-Sirius merger.

The paper, "An Economic Review of the Proposed Merger of XM and Sirius," was prepared for XM and Sirius and was filed yesterday to the FCC as part of the companies' merger application.

Furchtgott-Roth, founded Furchtgott-Roth Economic Enterprises in 2003 and frequently consults on issues related to the communications sector of the economy. From 1997 through 2001, Furchtgott-Roth served as a commissioner of the FCC and he is one of the few economists to have served as a federal regulatory commissioner and the only one to have served on the Commission.

"After studying various economic factors and potential changes in competing communications services, I conclude that American consumers have a wide and rapidly expanding range of choices for communications services that compete with XM and Sirius," said Furchtgott-Roth. "Additionally, these competitive choices discipline the prices that XM and Sirius charge subscribers today and will continue to do so regardless of whether the firms merge.

"I believe that government agencies should afford these companies the flexibility to respond to rapidly changing market conditions."

[Read the full Furchtgott-Roth Report (PDF)]

...or check out the key findings from the report after the jump. 

In a recent email sent to its members, the NAB has conceded that supporters of the XM/Sirius merger "are winning the war of words at the FCC."

Citing Siriusbuzz's FCC Comment Scorecard, the NAB asked their members to not let their members "win the war of words" and to "submit comments to the FCC opposing the merger!"

The NAB even said they are "working hard to derail the merger" but even so, they asked members to "enlist station personnel, friends and family" to aid their cause.

As of June 22nd, nearly 2,600 comments have been filed to the FCC regarding the Sirius-XM merger, and over 2,000 are in favor of it.

If you would like to submit your comments to the FCC, you can do so through the easy to use forms located on both XMmerger.com and SIRIUSmerger.com. They are definitely far easier to use than the FCC's own form.

The FCC has issued a Notice of Proposed Rule Making, which invites comments about whether the "rule" that prohibits XM and Sirius from merging should be waived, modified, or repealed.

In the Commission's 1997 Order, there is language that specifically prohibits one SDARS license holder from owning the other. Sirius and XM have said that the prohibition is a policy statement - and not an actual rule - because it was not codified in the Code of Federal Regulations.

The Notice of Proposed Rule Making opens this issue up for debate. Comments are due 30 days after publication in the Federal Register, with reply comments due 45 days after.

In a joint statement, Sirius and XM said:

"The companies are pleased that the FCC has outlined the full process for reviewing the SIRIUS-XM merger. This action puts all of the FCC decisions regarding approval of the merger on track. We remain confident that the merger is in the public interest, and continue to look forward to completing the regulatory approvals by year end."

Read the full Notice of Proposed Rule Making (PDF).

And the hits just keep on coming. FamilyNet now has joined the growing list of organizations voicing their support for the Sirius-XM merger.

The Fort Worth, Texas based FamilyNet operates Sirius' Christian Talk channel (ch 161), and FamilyNet TV can be seen in approximately 29 million TV households.

"FamilyNet has found satellite radio to be an ideal medium for bringing our message to consumers," said R. Martin Coleman, COO for FamilyNet Radio, in a letter to the FCC. "We support any efforts, including the Sirius-XM merger, which will help satellite radio survive and continue to benefit the public for many years to come."

Coleman added that "merging with XM Satellite radio will allow our rich blend of family-friendly and faith-based news and entertainment to reach an even larger audience, many in remote areas who would otherwise not have access to Christian programming through traditional terrestrial radio.

The League of Rural Voters has released an analysis comparing the 2002 EchoStar/DirecTV merger attempt, and the proposed Sirius/XM merger.

The report argues that in the EchoStar/DirecTV case, the FCC determined that there were at most only two DBS providers. Opponents of the Sirius/XM merger (like the NAB) have tried to describe it in the same terms. But the LRV study thinks otherwise.

"Satellite radio is often the best source for music, news and talk in rural areas," said LRV Executive Director Niel Ritchie. "However, it is far from the only choice. Sirius and XM are two small pieces in a very broad market. Rural consumers have an array of audio entertainment choices today and will continue to do so after the Sirius-XM merger."

The analysis, "Sirius/XM vs. EchoStar/DirecTV: A Fundamentally Different Merger for Rural Consumers," was filed recently in support of the companies' application with the FCC.

Here's what they found:

Distinct Market Definitions
The paper cites the 2002 FCC analysis of the EchoStar/DirecTV market, which specifically defined each local market as the two DBS providers and the local cable monopoly. This is in contrast to the "broad and competitive audio entertainment market in which satellite radio competes," that the LRV study found, a market that they consider to include terrestrial radio, Internet radio, iPods and other MP3 players, CD players and mobile phones.

The FCC also found there were significant barriers to entry in the DBS merger. This concern is moot in the satellite radio market, given the multitude of other competitors that have already entered the field and the anticipated release of future competitors such as HD radio and the Apple iPhone.


Different Impacts on Rural Consumers
The finding on the DBS product market gave rise to a number of concerns, including the reduction of viewpoint diversity and the creation of a monopoly in areas where there was no cable. "The FCC found that DBS operators contribute to viewpoint diversity by playing a 'gatekeeper role' that 'clearly affects' which entertainment and news programming is available," the paper says. "The audio entertainment market does not present the same concern, since it includes many different providers/editors."

Additionally, LRV's analysis concludes that the FCC's concerns in the EchoStar/DirecTV case do not apply to satellite radio because of its small saturation in a rapidly growing market, noting "...unlike the DBS merger reviewed by the FCC five years ago, the proposed merger between XM and Sirius comes at a time of strong and growing competition... In fact, in contrast to the DBS context, even a merged satellite radio provider would possess a slight market share and be constrained by the multiplicity of other media."

If you want to read the full report by the League of Rural Voters, check it out here (PDF).

The list of organizations filing comments with the FCC in support of the Sirius-XM merger continues to grow. This time around we have the Americans for Tax Reform, and the 60 Plus Association, who today filed a joint comment with the FCC supporting the satellite radio merger.

"This merger would create an appealing product for many consumers interested in multiple audio options," said Grover Norquist, President of Americans for Tax Reform. "The companies have broken new ground in offering consumers the ability to block channels and receive a credit for what they have blocked, without being forced by regulation to do so, therefore creating an alternative that will appeal to people of all age groups and sensibilities."

With the proposed a la carte offering (where subscribers can block channels they find offensive and receive credit back for that blocked content) Sirius-XM would be the first market-created a la carte system in the entertainment industry.

"The voluntary a la carte system these companies have pledged to implement is a prime example of the market working to attract new, family-oriented audiences," continued Norquist. "This is a testament not only to their commitment to families, but to the free market. No regulations were needed to impose this concept; it came about out of a void in the market they think exists.

Kudos to them for this interesting and bold step in a new direction not offered on terrestrial radio."

The National Council of Women’s Organizations (NCWO) recently called on the FCC to approve the proposed merger of XM and Sirius.

"Today, satellite radio is a mere 3.4 percent of the overall radio market – a market dominated by men.  A stronger satellite offering can increase the audience for satellite radio," said Susan Scanlan, NCWO Chair. "A more affordable and more diverse satellite radio market would be valuable not only to our members, but also to women across the United States."

The NCWO is a coalition of over 200 women’s organizations and representing over 11 million American women. They join other women's groups like Women Impacting Public Policy and Women Involved in Farm Economics in support of the merger.

"Expanding the audience and diversity of satellite radio programming would give women a better opportunity to access new sources of entertainment and enlightenment," added Scanlan. "Diversity in programming is a critical component of this merger, and should not be overlooked by members of the FCC Board as they begin their review process."