A recent filing to the Federal Communications Commission could be giving us the best hints towards concessions required to allow the merger between Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. to be approved by the agency.

The ex parte filing by Public Knowledge, which was made public late last week, disclosed that representatives from the non-profit group (including its President Gigi B. Sohn), met with Michelle Carey (the Senior Legal Advisor on Media Issues for Chairman Kevin Martin).

The purpose of their meeting was to reiterate Public Knowledge's support for the Sirius-XM merger.

Public Knowledge has supported the merger, but with 4 conditions:

• A La Carte tiered programming packages be made available (done)
• Sirius-XM dedicated 5% of capacity to educational/informational programming
• Price freeze for 3-years after the merger is approved.
• Sirius-XM make its devices "open" to allow any manufacturer to develop compatible products

Public Knowledge disclosed that a majority of the discussion was on the 5% of dedicated public channel capacity.

But the most interesting part of the filing is that the FCC asked Public Knowledge about Georgetown Partners' proposal.

Here's a snippet from the filing:

"Ms. Carey asked us whether we supported the proposal of Georgetown Partners L.L.C. that the Commission require the merged company to lease 20% of its channel capacity and a portion of its infrastructure to a minority owned corporation. I replied that the Public Knowledge 5% set-aside proposal was likely to lead to greater program diversity and to programming that would not otherwise be heard on a national satellite radio service. However, we would be open to the Georgetown Partners proposal to the extent that it was conditioned on a requirement that part of that capacity be dedicated to noncommercial programming over which the lessee has no editorial control."
(emphasis added)

In other words, if Georgetown Partners' proposal is approved, PK asks that Georgetown also should dedicate 5% of their own broadcast infrastructure to educational/informational programming. A sound request.

What's interesting is that Public Knowledge was even asked the question to begin with, and that their proposal was being discussed in-depth at this point in time (PK suggested these concessions nearly a year ago).

To me, this is an indication that we're nearing the final stretch (let's hope) and that the FCC is seriously considering Public Knowledge's suggestions. And this is a good thing. I've always found PK's requests to not only be reasonable, but also squarely in the public interest (as opposed in the special interest).

The Washington, D.C.-based public interest group punctuated their filing by pointing that the FCC's denial of DirecTV-EchoStar merger was actually not in the public interest, stating that "as separate companies, the DBS providers have not been able to compete against cable in a way that has lowered the latter's prices."

[Read FCC Filing (PDF)]
Thanks to everyone who sent this in!

That's what the Department of Justice is warning the U.S. Supreme Court about as it weighs in on an FCC indecency decision.

See, the Second Circuit Court of Appeals in New York remanded the FCC's indecency finding against expletives on Fox's Billboard Awards show. The court concluded that the FCC had "failed to provide a reasoned basis for reversing its longstanding indecency-enforcement policy with respect to isolated and fleeting expletives."

According to Broadcasting & Cable, Solicitor General Paul Clement, said the Second Circuit decision left the FCC little room to modify its policy other than two extremes, adding that the court's decision "attempts to coerce the commission to choose between allowing one free use of any expletive, no matter how offensive or gratuitous, or adopting a blanket prohibition on any use of expletives."

In other words, George Carlin's "seven dirty words" might not be found indecent anymore.

Clement said the lower-court decision "effectively prevents the commission from carrying out its charge, and yet it is the commission that will be held accountable for the coarsening of the airwaves."

The U.S. Supreme Court are scheduled to meet on February 29th to decide whether to take the case, though that date could easily be delayed.

[Broadcasting & Cable]

Federal Communications Commission chairman Kevin Martin confirmed recently that the agency was coordinating efforts with the Department of Justice, but had yet to reach a final decision on the merger between Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc.

Speaking informally at the NBA Tech Summit, Martin also said that while the Commission has received all the necessary information from the two satellite radio companies, they have yet to set a timeline in reaching a final decision.

According to paidContent:

"Traditionally the commission doesn't act on those after the Department of Justice --99 out of 100 times the Department of Justice goes first and the Department of Justice hasn't acted yet on that merger. We have some more information we requested at the beginning of the year from the companies so that we're trying to finalize our conclusions but we're coordinating with Department of Justice. I don't have a timeline."

Today marks the exact one-year anniversary since Sirius-XM merger was announced.

[paidContent]

The National Association of Broadcasters (NAB) fear that satellite radio may have "different needs and incentives for the use of terrestrial repeaters" as a result of the merger between Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc.

One of the NAB's concerns is the "heightened desire to offer locally oriented programming, including local advertising" through the repeater network. So the NAB is asking the FCC to adopt final repeater rules that block Sirius-XM from offering local content on their repeater networks.

This isn't anything new.

Over a year ago, an NAB-backed bill (H.R. 983) was introduced to Congress, meant to "preserve local radio" and in effect would stop the airing of Amber Alerts and other emergency services on Sirius and XM. Somehow I don't see this as being in the public's interest.

In the its recent FCC filing, the NAB continues, "In adopting final rules for [satellite radio] repeaters, it is also necessary that the commission be mindful of the SDARS licensees' record of misbehavior in this area."

They go on to highlight violations regarding Sirius and XM repeater towers. Of course, this ignores terrestrial radio's own history of FCC violations.

Oh I get it: Do as I say, not as I do.

How about this instead. If regulators do feel that terrestrial radio is a substitute for satellite radio, and that they compete in the same relevant market, then satellite radio should be permitted to provide more - not less - localized programming. There is absolutely no need for an 80-year old government-granted monopoly over local programming to continue to exist in this day and age.

But that's exactly what the NAB wants. In their on-going attempt to save itself - rather than actually trying to innovate and provide a compelling product - they want to prohibit other local programming, and secure they're stranglehold on "localism." Now that's anticompetitive.

[via Radio Ink]

Georgetown Partners continues to push hard in its efforts to have the FCC require that Sirius-XM hand over 20% of spectrum to the company, should the two satcasters merge.

Below is what Georgetown has been doing at the FCC, in only the past two-weeks:

• January 31st - Chester Davenport (pictured), Managing Director of Georgetown Partners, and other members representing the company met with several members of the FCC. [Link (PDF)]
• February 6th - Chester Davenport met with Commissioner Jonathan Adelstein and Rudy Brioché. [Link (PDF)]
• February 7th - Chester Davenport and the Rev. Jesse Jackson, met with Chairman Kevin Martin and Daniel Gonzalez.
• February 7th - On that same day, Chester Davenport and the Rev. Jesse Jackson, met with Commissioner Copps, Commissioner Adelstein, and Scott Deutchman. Then in a separate meeting, Davenport and Jackson met with Commissioner Deborah Taylor Tate and Amy Blankenship. [Link (PDF)]
• February 11th - David Rivkin, a Partner at Georgetown Partners, met with Commissioner Robert McDowell. [Link (PDF)]

Meanwhile, Georgetown also received some additional support from the National Caucus and Center on Black Aged, who filed with the FCC (PDF) to express their "concerns" over the merger between Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc.

The NCBA on Black Aged subsequently provided their support to Georgetown Partners' plan, stating that it "squarely resolves the problems at the heart of this issue."

It can be argued that handing over a portion of Sirius-XM's broadcast infrastructure is in the "public interest" - but Georgetown Partners has absolutely no prior experience with satellite radio.

Then again, Georgetown Partners had no prior experience in telecommunications. But that didn't stop Davenport when he made a deal with GTE to buy half of Ameritech's wireless business back in 1999. [New York Times]

So here's a piece from Clear Channel's recent FCC filing that I didn't notice before: the largest radio conglomerate in the country is calling satellite radio "a genuine threat" to terrestrial radio.

Maybe they didn't get the memo from Cox Radio? Didn't Robert Neil say that satellite radio just wasn't "a real business" - and yet now it's a genuine threat?

In the filing, Clear Channel said a merged XM and Sirius would create "a genuine threat to the economic framework of terrestrial broadcast radio."

But of course, Clear Channel is no stranger to building up that "economic framework." Clear Channel's co-founder Red McCombs (who started the radio giant with Lowry Mays back in the '70s) has a personal net worth of a whopping $1.6 Billion.

And this "genuine threat" consists of a mere 4.1% metro unweighted quarter hours, according to the latest Arbitron numbers. Oh but, the company which is synonymous with "monopoly," is now crying foul. Lest we forget, Clear Channel's forward sales agreement with XM (a product of their early investment in the satcaster) is set to expire in June of this year, at which time they're expected to hand over 8.3 million shares in XM to Bear Stearns.

So I wonder if they have any ulterior motives in seeing the merger get scuttled? Nah, I'm sure it's all just completely "genuine."

[via FMQB]

The eternally soft-stepping M&A Researcher has come out with an analysis this weekend stating that the chances of the Sirius-XM merger passing regulatory muster have been reduced now, thanks to its lengthy delays.

M&A's reasoning is multifold, but the end result is that they put the chances at approval at less than 33% - in fact, they ultimately give it a 1-in-5 chance of success.

In my opinion, I feel the delay bodes well towards the final approval of the deal - in that, there's a chance that someone got wind of approval and opponents are now working towards concessions to scuttle the ship. Hints at surrendering spectrum having been the "end game" strategy all along even further solidifies this feeling. But, M&A also has a good point that the Sirius-XM merger will likely be the last deal the DOJ/FCC will decide. And love 'em or hate 'em, M&A has been pretty accurate up to this point.

[Seeking Alpha]

Chairman Kevin Martin said the FCC would vote on the News Corp-Liberty Media transaction for DirecTV. News Corp will be swapping its 41% stake in the satellite TV provider with Liberty Media's 16% stake.

Martin said he would vote to approve the transaction, though he didn't indicate how the other commissioners would vote. The Chairman said he had instructed the four other commissioners to vote to approve the deal by February 26th (the next public meeting), which has been awaiting FCC and DOJ approval for over a year.

To put this in perspective in comparison to the Sirius-XM merger: the Liberty-DirecTV transaction has been on the FCC's clock for 355 days, while Sirius-XM has been on the clock for 248 days.

So at that pace, we have another 3 months or so ahead of us.

[via Wall Street Journal]

The increased level of merger-related activity over at the FCC continues, now with a series of meetings held by the Media Access Project/Prometheus Radio Project.

The Prometheus Radio Project, a non-profit founded by a small group of radio activists, is joined by the Media Access Project, is a non-profit law firm that pursues "the public’s First Amendment right to hear and be heard on the electronic media." They have objected to the merger since June (PDF).

The two have increasingly been engaging the FCC in meetings, urging for denial of the merger - or the placement of restrictions should the merger be approved.

In their most recent meetings, the Media Access Project and Prometheus Radio Project met with representatives for Commissioners Copps, Adelstein and McDowell - in the past two days.

So what conditions would these two non-profit groups want imposed? Simply said: they want 50% of Sirius-XM spectrum to be stripped away.

"...the Commission has already determined that 12.5 MHz is sufficient for an economically viable SDARS system, thus the Commission should make other uses of the excess capacity," wrote the Media Access Project.

"Specifically, the Commission should: (1) create a set-aside for non-commercial educational programming; (2) require the combined entity to lease capacity to unaffiliated commercial programmers; or (3) require the excess capacity to be returned for auction."

...and you thought Georgetown Partners' demands of 20% of spectrum were bad?

[FCC Filing: 1 (PDF), 2 (PDF)]

Orbitcast has learned that the National Association of Broadcaster and Clear Channel have been working toward the ultimate goal of forcing Sirius-XM to surrender spectrum, according to an unnamed source.

According to the source, who agreed to reveal this information under condition of anonymity, the merger opponents have suspected all along that the merger would pass. Their strategy has been to make noise under the guise to block merger, then concede and compromise for a spectrum surrender.

"This has been the end game all along," Orbitcast was told.

Clear Channel's most recent filing further solidifies this theory. It also adds to the suspicion that the delay in coming to a decision over the Sirius-XM merger has been the negotiations on how much spectrum the companies will surrender.

I question the level to which surrendering spectrum would make the entire merger useless - and indeed, that may be the merger-opponents' game plan. As I understand it, surrendering spectrum is a deal breaker. Now, I can see Sirius-XM conceding to a "free to air" requirement - in that a percentage of spectrum is alloted to non-commercial/informational programming that Sirius and XM have no editorial control over (as brilliantly proposed by Gigi Sohn). But to carve out a chunk and divest at will? That seems like a deal breaker to me.