When NAB President and CEO David K. Rehr delivered his opening keynote address at NAB2007 in Las Vegas yesterday, he unsurprisingly used the opportunity to voice the NAB's adamant opposition to the Sirius-XM merger. Rehr said the merger "certainly would not be in the consumer's benefit," adding his view that "this is not about the consumer. It is not about advancing technology. It is about lining the pockets of financiers and corporate executives."

So let's take a look at the NAB's long history of lobbying in Washington against the development of satellite radio. Afterall, this is an organization that is so concerned with the advancement of technology, the benefits of the consumer - and at same time, not concerned with the lining of one's pockets. Surely then they wouldn't try to stifle open competition from satellite radio right?

The reality is that for more than 25 years, the NAB has objected to the evolution of communications technology, including satellite television, "drop in" radio stations, low-power radio and low-power TV band devices... all in addition to their opposition to satellite radio.

Their latest effort to block the merger of Sirius and XM is actually only part of a massive multimillion dollar effort that began 17  years ago. Below is a timeline of the NAB's efforts against satellite radio, long before a single satellite was even launched:

1990: The NAB tried to make end run around government plans to create a satellite system by proposing a digital system using land-based radios.
1992: The NAB mobilized opposition to the FCC’s proposal to set aside spectrum for satellite radio.
1994: The NAB submitted a filing to the FCC opposing any licenses to operate satellite radio technology.
1995: The NAB filed a report with the FCC and mounted a publicity campaign warning that satellite radio “will fragment radio audiences and make local radio unprofitable.”
1997: The NAB paid Kagan Consulting to produce an “independent report” claiming that FM radio would suffer great financial harm from satellite radio.

The NAB’s efforts to stop satellite radio failed. That, however, didn't stop their opposition.

At the heart of NAB’s argument is the claim that the merger is anti-competitive. But to me, the best validation of the true competition in the audio marketplace is the fierce response that the NAB has had to the Sirius-XM merger proposal. Understand this: The NAB is not motivated by serving the greater good. They are in business to advocate for their members.

The NAB knows that Sirius and XM compete with over 10,000 free radio stations in the country. The NAB (and its members in numerous SEC filings), have admitted it:

• Last September, in his remarks to the NAB Radio Show in Dallas, Texas, NAB President and CEO David Rehr declared, “In 2006, we have satellite and internet radio [as competitors]. And barely a day passes without the introduction of a new competing device or service. But we have news for our competitors: ‘We will beat you – as we have beaten those change agents in the past.’ ”
• The NAB in October 2006 provided media ownership comments to the FCC seeking relaxation of radio ownership regulations (how ironic?) and cited satellite radio and other competitors as justification.
• That same month at the National Press Club, the NAB’s President and CEO, David Rehr, cited satellite radio as one of AM/FM’s competitors.  

But as soon as the merger was announced, the NAB embarked on a non-stop campaign to distract regulators and consumers from the facts surrounding the proposed Sirius-XM merger:

• Washington guns for hire...
  
  The NAB has used its money for any Washington hired guns it could find, notably John Ashcroft. The Wall Street Journal reported that "Former Attorney General John Ashcroft, who sent a letter…to his successor Alberto Gonzales blasting the proposed merger of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., approached XM in the days after the merger was announced offering the firm his consulting services." The NAB has since hired James C. Miller and Philip M. Napoli to send their own "independent" letters of opposition.
  
  
  
• And the verdict from the Carmel Group is...
  The NAB also paid the Carmel Group, a California consulting firm, to change its views about competition in the audio entertainment market. In an article written a year-and-a-half ago, before being hired by NAB, Carmel’s Jimmy Schaeffler described satellite radio’s competitors as "traditional analog AM & FM radio, as well as burgeoning services like MP3 players, terrestrial radio, and video- and Internet-to-the-vehicle." Yet, after receiving funds from the NAB, Mr. Schaeffler produced a white paper saying exactly the opposite.
  
  
• The best funded college student group I know...
  On February 28th, Corporate Crime Reporter uncovered the real story about the Consumer Coalition for Competition in Satellite Radio (C3SR), a group of law students opposed to the XM-Sirius merger. C3SR claimed to be an independent grassroots consumer organization and refused to say who funded it. But admitted to being "supported" by the NAB. And is able to afford commissioning reports (which reportedly can cost upwards of $400/hour) by Gregory Sidak of Criterion Economics.
  
  
• Legislators legislating on their own behalf...
  Mike Hubbard, Alabama's House Minority Leader, was the lead sponsor of a non-binding resolution against the merger of Sirius and XM, which was passed by the Alabama House of Representatives on March 29th. Interestingly, Hubbard is a member of the Alabama Broadcasters Association who owns a terrestrial radio station and an audio production company serving the national broadcast industry.

And, of course, their rhetoric has changed. NAB President Rehr now claims that satellite radio doesn't compete with AM and FM radio.

Now the competition is "one way" (how convenient), and the $20 billion radio industry will face unfair competition from a combined Sirius-XM (which together have a mere 3.4% of total radio listening, according to a recent Arbitron survey).

NAB members like Clear Channel claim that a merged satellite radio company would unfairly hurt "local" radio (imagine that, Clear Channel is now "local"). Of course, Clear Channel Communications is well diversified and is working to provide nationwide mutlichannel audio content for HD Radio stations, mobile wireless audio providers and more. Don't believe me? Just listen for yourself.

The harder the NAB works to quash competition, the easier it is to see their hypocrisy. "Words have consequences," Rehr said in his keynote yesterday. So true.

Mel Karmazin's testimony before the Senate Commerce, Science & Transportation Committee today drove the concept that a combined Sirius-XM would offer "more choice, lower prices." It's a mantra that has been repeated time and time again.

But Karmazin pointed out that a purpose of the merger is to compete better against free radio, and so the goal is to provide better value for consumers. In other words, the combined company will actually lower prices.

"Consumers who want fewer channels than currently offered will be able to select one or more packages of channels for less than $12.95 per month," said Karmazin in his testimony. "These packages will include an attractive mix of music, news, informational, sports, children’s, and religious programming."

An encouraging statement for those skeptical of a merged satellite radio provider.

In the recent Carmel Group study, Senior Analyst and Chairman Jimmy Schaeffler writes an analysis about the proposed XM-Sirius merger, and drafts point-by-point blows combating each argument in favor of the merger.

One key aspect that Schaeffler argues against is the definition of the competitive landscape. Here's a quote from the Carmel Group report:

"Sirius and XM make an argument that is critical to the success of this proposed merger. They state that their competitive landscape presently includes all forms of terrestrial radio (i.e., analog AM and FM, digital HD and Internet radio), as well as digital services such as MP3 devices and music-to-cellular telephones. This position is ludicrous. In fact, nothing could be further from the truth."

Note that I added the emphasis on the "ludicrous" statement. That's something that the media is picking up on very heavily.

But exactly how ludicrous is this position? Exactly how far from the truth could it be? Not too far I guess, because Jimmy Schaeffler took that position himself in a Carmel Group article written in October 05, 2005:

"...satellite radio, with more than seven mil. subscribers, and its 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. "

Now that's not a selectively snipped quote. Read the full article yourself - it goes on to outline and describe satellite radio's competition, and what obstacles they will face in the years to come.

This is an article that was written (free of any funding from the NAB) only a year and a half ago by The Carmel Group, and it explicitly defines satellite radio's competitors. But yet an NAB commissioned report by the same group suddenly claims that any such definition is "ludicrous."

Coincidence?

Check out this new TV spot by XM. One thing I like about it is while it's generally sports-themed, XM gives special attention to baseball specifically (as they should). So they're appealing to all sports fans, but targeting the MLB fan. Nice.

This TV commercial is currently running during MLB games on Fox, ESPN, and DirecTV, as well as ESPN's "Baseball Tonight" and other sports programs.

I dig it. 

The Carmel Group, a self-proclaimed influential research firm, has released a study exclusively to the New York Post countering the XM-Sirius merger.

A key highlight of the study is the so-called "ping-pong chart" illustrating historically XM's and Sirius' competitive reactions to each other. The Carmel Group created a similar chart for the EchoStar-DirecTV merger, which they themselves cite as being a significant deciding factor for rejecting that merger (sadly the FCC says nothing of it).

The Post cites one example, where the chart notes that in December 2002, XM launched its first portable satellite radio, which they assume prompted Sirius to do the same just 5 months later. (You have to wonder what they consider the development cycles to be for receivers... I think a 5 month turn-around time from concept to production sounds reasonable - don't you?)

I'd like to see this ping-pong chart, because I'll make one just for terrestrial radio's reactions to satellite radio. Was HD Radio a reaction to Satellite? Nah! Was renaming your stations to "Free FM" a reaction? Absolutely not! How about those "Radio, you shouldn't have to pay for it" ads?

...oh, but let's forget about all that. I just want to highlight one specific thing about The Carmel Group report: It was sponsored by the NAB. 'nuff said. 

[New York Post] 

Looks like Sirius is strengthening its relationship with Ford. Starting with the 2008 model year, Sirius Satellite Radio will be factory-installed satellite radio on the Lincoln MKZ, Lincoln MKX, Lincoln Navigator, Lincoln Navigator L and Lincoln Mark LT.

Last week Sirius announced that their satellite radios will be standard equipment in select Land Rover vehicles. Land Rover is owned by Ford Motor Co.

About 600,000 Ford, Lincoln and Mercury vehicles have already been shipped with factory-installed Sirius satellite radios. Those numbers are expected to more than double in 2007 as Sirius will be offered in 23 different models this year.

On top of being standard-equipment, a six-month pre-paid subscription to Sirius is included with each Lincoln vehicle.

(Hey, are you subscribed to Orbitcast? Well why the hell not? Keep up to date with the latest in satellite radio news and info by subscribing to the feed, or you can subscribe by email. Don't worry, you can thank me later.)

The FCC has recently issued a competitive report and analysis on satellite communications services, and the NAB is using it as an opportunity to spin the report's findings in their favor.

The NAB issued a statement stating that the recent FCC analysis determined that the relevant market for satellite radio consists solely of XM and Sirius - something that is being echoed (almost word for word) in several industry publications. Below is a quote from the all mighty NAB President/CEO David K. Rehr:

"This FCC decision that the current duopoly of XM and Sirius do not compete with radio, iPods or any other audio sources in the satellite radio market further undermines the arguments made by XM and Sirius to obtain a government-sanctioned monopoly. While the FCC clearly intends to examine all issues surrounding the XM/Sirius merger, the hurdle the parties must overcome to convince the FCC to change direction is very high. This is a dramatic blow to XM/Sirius' presumption of a broader market, and still more evidence that XM and Sirius compete ferociously against each other in the market for nationwide multichannel mobile audio services, and no one else."

It really reads like doom-and-gloom (as is the purpose of issuing such a statement), but that's actually not entirely the case.