The Reverend Jesse Jackson today at an FCC hearing on localism voiced his opinions on the potential competitive harms he feels could come to minorities should the Sirius-XM merger be approved.

"The proposed Sirius-XM merger would eliminate the potential of any meaningful competition in the satellite radio market, which would, in turn, permanently block the potential for diversity of ownership and control by minorities in the only medium capable of nationwide broadcasting," said Jackson.

Jackson continued, "I urge this commission to view this proposed transaction - as it is currently structured - not in the public interest. It will eliminate diversity of content and meaningful opportunities for minority partnership in media ownership. This cannot happen. This commission must uphold the statutes and regulations that promote content diversity and opportunities for media ownership by minorities."

"The commission should seize the opportunity presented by this transaction to make a difference that serves the best interests of all concerned: Sirius and XM in their objectives, the marketplace and diversified ownership and competition, and the public's right of access to benefit from varied programming that is appropriate and feasible," Jackson continued.

"The proposed transaction would result in the business combination of the two most significant and largest companies in satellite communications. In effect, this creates a monopoly, virtually making competition impossible and programming dangerously subject to the combined entity's self-interests and whim. This puts the public at a disadvantage. It has the potential of serious economic havoc on any business attempting to be a part of this marketplace and to the communities of which these businesses serve," said Jackson.

This is in direct opposition to the opinion of the NAACP, which came out in favor of the merger earlier this year, stating that a merged satellite radio company would "strengthen its commitment to diversity."

As we near the final stretch of this high profile merger, it looks like things are really starting to heat up.

[Radio Ink]

This might very well be the last quarter that we will be comparing XM and Sirius subscriber numbers, as two separate companies at least. So, let's get to it before time runs out and we're forced to hold hands and sing Kumbaya together.

And because pictures are much easier to look at than a matrix of mind-numbing digits, here's some charts to help us along.

Total Satellite Radio Subscribers

• Sirius Satellite Radio: 7,667,476
• XM Satellite Radio: 8,570,000

In other words, Sirius is currently where XM was in 4Q06 (~7.6M). In the 2nd-quarter of this year, Sirius was where XM was in 3Q06 (~7.1M).

Remember, there's a seasonality in retail which historically sees a spike in Q4. So this may not be a fair comparison. The killer question is whether either company has the momentum to have a stellar holiday season this year to make a difference. So far, the signs have not been encouraging.

Quarterly Net Subscribers

• Sirius Satellite Radio: 524,938
• XM Satellite Radio: 315,000

Quarterly Gross Subscribers

• Sirius Satellite Radio: 999,284
• XM Satellite Radio: 952,000

Since gross subscribers scrubs out the effects of churn, and evens out other factors like including together promotional/non-promotional subscribers, here we can gather a better sense of market penetration. So I really do like to look at gross subscribers over net subscribers when looking at how both are performing.

Again, we see that in 4Q06, there was a tipping point where Sirius now leads XM consistently in gross subscriber additions.

Eleven members of Congress voiced their support for the Sirius-XM merger, in a letter addressed to FCC Chairman Kevin Martin.

The letter was signed by:
Rep. Sanford Bishop (D-GA), Rep. Corrine Brown (D-FL), Rep. Yvette Clarke (D-NY), Rep. Danny Davis (D-IL), Rep. Eliot Engel (D-NY), Rep. Ralph Hall (R-TX), Rep. Alcee Hastings (D-FL), Rep. Carolyn Maloney (D-NY), Rep. Greg Meeks (D-NY), Rep. Bobby Rush (D-IL), and Rep. Edolphus Towns (D-NY).

"...the merger of Sirius and XM will create new opportunities for this type of diverse programming that has been overlooked by terrestrial-radio broadcasters. This merger will allow the companies to offer even more diverse content by consolidating programming and better utilizing capacity to offer even more unique and diverse programming to currently underserved populations."

The timing of this is interesting.

The NAB came out with their own Congress-backing letter to the FCC many months ago. Meanwhile, Sirius-XM lately have seen momentum build on Capitol Hill with support from various lawmakers. Is this a calculated "killing blow" tactic? Or did it just take them this long to garner this level of support?

[Read the letter here (PDF)]

Arbitron has released the Spring 2007 ratings for both XM Satellite Radio and Sirius Satellite Radio.

The report breaks out each service's channel by channel data of both cume (short for "cumulative audience" - essentially the unduplicated persons or households listening during a specific period) and AQH (Average Quarter Hour - the average number of persons listening to a station for at least five minutes during a 15-minute period).

XM led significantly with a cume of 10.33 million listeners versus the 6.6 million listeners at Sirius.

But Howard Stern owned the top spot as the most-listened to satellite radio channel with over five times as many listeners as Opie & Anthony:

• Sirius' Howard 100 (ch 100) had a cume of 1.22 million listeners and an AQH of 96,700
• XM's The Virus (ch 202) had a cume of 216,800 listeners and an AQH of 20,800

While Howard 100 was the #1 most listened to satellite radio channel, XM's Top 20 on 20 (ch 20) ranked as #2, with 1.05 million cume listeners and an AQH of 21,800 listeners.

XM's listening is more evenly distributed, while Sirius is more Howard Stern-biased (Howard 101 even had a cume of 502,000 and AQH of 30,700).

Check out the full Arbitron ratings report here (PDF).

[via Radio-Info]

The NAB has been curiously quiet as of late. First they take down the XM-Sirius banner, then a pro-merger piece in Roll Call goes unchallenged... an interesting change in direction considering the vehement opposition we've seen throughout the year (or the past 17 years depending on how you look at it).

Last week, FCC Chairman Kevin Martin expressed his desire to relax media consolidation rules, something that the NAB would very much want. Martin even wants to expedite the agency's review, hoping to conclude the proceeding in November and schedule a vote on December 18th.

Then yesterday, the NAB filed comments with the FCC over a series of research studies regarding media ownership for the Commission's pending quadrennial broadcast ownership review. Unsurprisingly, they urged the FCC to reform media ownership rules, stating that doing so would serve the public interest in light of competition.

"This continuing proliferation of outlets and rapid pace of technological change in the media marketplace further underscores the need for Commission action to update its ownership rules," the NAB wrote in the filing. "Only competitively viable broadcast stations sustained by adequate advertising revenues can serve the public interest effectively and provide a significant local presence." (emphasis added)

The argument that the NAB is using here is nearly identical to the argument that justifies the merger of Sirius Satellite Radio Inc with XM Satellite Radio Holdings Inc. If in fact the fragmentation of media, and the increasing technological choices that enable further fragmentation, were a reason for relaxed media consolidation rules - then the same rules would apply for a merger of Sirius and XM. And vice versa.

But time is running out... and fast.

Martin wants to fast-track the media consolidation decision, a point that has brought on the ire of big names like Barack Obama not to mention the bi-partisan opposition of Sens. Byron Dorgan (D-ND) and Trent Lott (R-MS).

The NAB doesn't need any further opposition, nor do they need the sword of "hypocrite" hanging over their heads during this important juncture. Time is running out, and battles must be chosen. If David Rehr has to pick one to lose, it might as well be to cede to the Sirius-XM merger in order to gain in relaxed media consolidation rules (which do you think its members want more?). A satellite radio merger, in the grand scheme of things, really has little effect on terrestrial radio considering that only 4.1% of total listenership is attributed to Sirius or XM. While relaxed media consolidation rules changes everything for the NAB's members.

As suggested in the Orbitcast Forums, a brilliant move would be if Sirius and XM both filed comments with the FCC in support of the NAB's comments. It would further solidify their arguments to merge, not to mention be a wonderful twist of the dagger in Rehr's side. As the old adage says, you can catch more flies with honey than with vinegar.

And this is afterall, politics.

If you thought Citigroup putting the chances of the Sirius-XM merger at 69% was being optimistic, wait till you see what Tom Watts of Cowen & Company wrote in a recent note issued to clients.

Watts finds that there's a “70%-plus chance” that the merger of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. wins government approval.

The Cowen & Company analyst says the Department of Justice decision should come “relatively soon,” with both companies in full compliance with the DoJ’s information requests. He says a ruling from the FCC should follow soon after. About a month ago, Watts said that approval of the deal could come as early as October.

Watts has Outperform ratings on both stocks, “even without M&A potential.” He thinks both companies can beat the market on free cash flow potential alone. Watts also feels that XM and Sirius set conservative subscriber growth estimates for 2007, “setting the stage for out-performance in the second half.”

[Barrons]

Gary Parsons, Chairman of XM Satellite Radio, last week took the time to talk with Orbitcast to discuss the pending merger with Sirius, and the state of satellite radio today. If regulators approve the deal, Parsons is slated to become the Chairman of the combined XM-Sirius, not to mention boss of Sirius' current CEO, Mel Karmazin (whom I interviewed in August).

So without any further palaver, onto the interview...

Given the passionate opposition of the merger by the NAB, do you fear that the political influence of the organization will somehow prevent the merger from going through? They do have significant clout up in Capitol Hill.

First, let's first go with your characterization of "passionate opposition." There is a lot of "huffing and puffing, blow your house down" running around that's going on. I actually have to tell you that their opposition is actually helping our case more than it is hurting it. I think particularly so when more of their deceptive practices have emerged. Such as misrepresenting the views of Congressmen or companies like Toyota, and funding shell organizations so that it appears they have raw support. Those elements I think certainly damage the credibility and strength that they have built up over the years.

While certainly they are a formidable lobby in Congress, the analysis of this effort right now is going on at the FCC and the DOJ.

And one of the most compelling prima facie evidences of being positive for competition and positive for the consumer, is the apoplectic response of the dominant provider. That is exactly what anti-trust specialists look for, and that is being played out in grand fashion.

Below is a video featuring a hands-on look at the upcoming Sirius Stiletto 2. As always, if you're viewing via Email or RSS Reader, you may need to click-through to view the video...

Yes, this was taken when I visited Sirius headquarters and featured some hands-on photos of the Stiletto 2. I just got around to editing the video now. Sorry for the uber-delay.

In a follow up to the note issued earlier this week, Citigroup analyst Eileen Furukawa suggests in a report issued this morning that there is a 69% chance that the XM-Sirius merger gets approved by either the FCC and/or the DOJ by December 5th.

Furukawa estimates the current Sirius Satellite Radio Inc. stock price reflects a 41% chance of approval, "which is too bearish" while the XM Satellite Radio Holdings Inc. price reflects an even lower 29% chance of approval.

"Based on our view of a 69% probability that the deal is approved around December 5, and the associated stock moves based on the ruling, we conclude that XMSR calls are cheap, " write the Citigroup analyst.

While the analyst maintains a "Buy" position on both SIRI and XMSR, Furukawa feels that buying XMSR January '08 calls can be an attractive alternative strategy for investors looking to gain exposure to the XMSR/SIRI M&A event.

If the deal is rejected, Furukawa anticipates that XMSR will trade down 26% while SIRI will trade down 25% from the intraday price used.

"However, if the deal is accepted, to which we attribute a 69% probability, then we sense that both stocks will move higher in response," adding that the the speed of the move depends on how much investors believe the speed and magnitude of synergies can be achieved.

In a press release that just went over the wires, Sirius and XM are making sure that folks know of the recent public support for their pending merger.

From members of Congress like Rep. Engel (D - NY), Rep. Boucher (D - VA), Rep. Weiner (D - NY) and Rep. Sessions (R - TX); to automaker (and Sirius partner) Kia Motors; to consumer advocate groups that most people here have never heard of; to unlikely bedfellows Charlie Daniels, Cousin Brucie and Deepak Chopra - the satcasters are beating the PR drum as we get down to the final hour.

Here's some of the better quotes in my opinion (the rest are viewable after the jump):

"The proposed merger should be considered in the context of a broad market definition, which includes the entire marketplace for audio entertainment. Under such an appropriate definition, the merger would combine only a small percentage of the market, but would lead to significant pro-consumer benefits. I, therefore, believe the merger is in the public interest and urge that the Commission approve it." (Rep. Rick Boucher, September 4, 2007)

"There is no doubt that the merger would be good for consumers of this service. A merger will allow the two companies to pool their resources, cut costs through economies of scale, boost innovation by bringing together their best and brightest talent, and ultimately make more programming available to subscribers." (Rep. Anthony Weiner, September 12, 2007)

"IWF is also interested in the increased efficiencies of a combined company and greater competition from other audio providers that would increase the speed to market of new and advanced technologies in satellite radio and audio entertainment. These are exactly the kinds of byproducts fueled by a free market that would simply not be possible without a merger of the two companies." (Michelle D. Bernard, Independent Women's Forum, October 1, 2007)

"The merger between SIRIUS and XM will further enhance Kia's goal of providing our customers with high-quality, high-value products. We believe that it is in our customer's interest and the public interest to allow SIRIUS and XM to merger." (Kia Motors, August 21, 2007)

"Truckers were among the first satellite radio customers and many continue to be very loyal listeners. They also will have a lot to gain from this proposed merger. Once this deal is approved, truckers and others who spend many hours on the road will have a greater range of programming choices and packages available to them." (Charlie Daniels, October 2, 2007)

More after the jump...