Decyphering the FCC's info request - Orbitcast

Decyphering the FCC's info request

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Sirius XM Merger[Updated to include joint statement from Sirius-XM]

It's difficult to interpret exactly how the FCC's request for additional info weighs in on the Sirius-XM merger prospects.

From one side, it's a request that comes fairly late in the game - which could be an indication that the Commission isn't as far into the process as originally hoped. As Bank of America analyst Jonathan Jacoby puts it, the timing of the request "indicates to our contacts that the FCC isn’t as 'in the bag' as many on the Street believe."

Perhaps the late request means that FCC isn't as near to reaching a decision as previously assumed?

On the other side, it could mean that the FCC is anticipating a decision by the DOJ, and is finalizing their own information collection procedures. The move could also be meant to appease those who've asked for the clock to be stopped (NAB, U.S. Electronics, etc.) based on the need of more information.

The quick two-week turnaround required - while not stopping the clock - might be perceived as a positive, since there's definitely a degree of urgency there. The requests are also very specific, which could be that the FCC is dotting i's and crossing t's as we near the end of this ordeal.

Superstar analyst Robert Peck of Bear Stearns brings another thought that should be even more encouraging to merger-hopefuls. His thought is that the DOJ could be nearing approval, which means the FCC needs to finalize their own process.

"If the DOJ were close to denying the deal, the need for such detailed information would not have arisen in the first place," writes Peck in a recent note.

So the FCC asking for more information could be an indication that the DOJ will be approving the merger, as has been widely rumored, otherwise the Commission would simply deny the merger on the basis of Rule 25.118.

Very interesting.

UPDATE: I asked Sirius-XM about the FCC's request, below is their joint response:

"This is a next step in the regulatory process. It is not a surprise. This is information that has already been collected for the DoJ and is easy to share with the FCC. We continue to work with regulators and expect the merger to close by the end of the year."

43 Comments

the fcc needs to gather all the related information for reveiw by enforcement that which relates directly to the interoperable device issue as mandated...both xm and sirius have tried to downplay the fact for what ever reason the devices never reached the consumer level and that enforcment is currently looking at this issue..

I dont see this as a indication its over .....one must bear in mind the doj had a very simple task look for anticompetitive issues today and going forward post merger...


the fcc granted a near monopoly position for satellite radio as the field was limited to just two players. then they mandated dual devices which should have really drove the required cost lower. the fcc even suggested then it would be better to use the same platform and technologie to help drive the dual concept quicker with shared cost burden.

both companys claimed it was coming for a long time without a merger so what changed and why were the shareholders not informed...

and if the devices are currently on the market please inform the public and activate the devices..

and if one of the companys stone-walled the issue what did the other do to address the failure....with the fcc..

in 2005 the fcc requested a time line from xmsr and sirius on the dual devices being brought to the consumer market....

guess we wait to see what items the doj could make public when it speaks on its position and ruling..

Ryan,
considering much of what was asked for is reported to have been submitted with the millions of other docs already----sounds like its to appease the Us Electronics people to get their specific questions answered---again....

the last joint statement that was just added makes sense as i forgot to realize the docs could be different that is sent to the DOJ when compared to the FCC---It sounds like they could have those additional doc in the fcc hands within a week

Man, it's painful watching the product that I love as a consumer about to be ruined. It's also discouraging to see that our government doesn't care in the slightest that this merger clearly creates a monopoly and will, in the long run, ruin the product. I love my XM, and can't stand the channels on Sirius (yes, I have an online account for Stern). It won't take long before Mel's influence ruins XM. Sad.

You gotta love Jacoby. He is negative to the end. Remember when he said the "Stern Effect" was over after the first quarter of '06? He has been wrong about as many times as he has been right...

Just as long as they dont get rid of Opie & Anthony...I really could care less! Cause Stern is a hooked nose Jew that is past his prime and needs to retire!

O&A Party Rock!

Why does everything have to be about O&A.

I'm a sweet boy, too.

>>> Remember when he said the "Stern Effect" was over after the first quarter of '06? He has been wrong about as many times as he has been right...

One thing is certain -- today, the Stern Effect is long gone. With SIRI's horrible retail performance last year, it is clear that Stern is the only one who will make money on that deal.

He took Sirius for an absolute ride.

"One thing is certain -- today, the Stern Effect is long gone. With SIRI's horrible retail performance last year, it is clear that Stern is the only one who will make money on that deal."

Ok Stack whatever you say... Face it XM would have wiped Sirius out long ago without "The Stern Effect", NFL or not. XM had NEGATIVE 17,000 retail net ads this quarter. Is that the O&A or Oprah effect ?? People want stock FACTORY installs, not the BIG ugly portables hanging off of their dash.... Also, this merger has people holding out on new radios. I would love to buy a new Stiletto 2, but I am waiting on the outcome of this never ending acquisition of XM.....ahem....I mean merger. BTW the merger WILL go through... Time to flush your XM radio down the toilet and go "F" someone isn't it ??


@Stackpointer "it is clear that Stern is the only one who will make money on that deal. He took Sirius for an absolute ride."

My prediction - 1 year from today Arbitron ratings will show close to 3 million listeners for Howard 100 and Howard 101 combined.

@rjr "You gotta love Jacoby. He is negative to the end. Remember when he said the "Stern Effect" was over after the first quarter of '06?"

Jacoby negative??? WHAT??? I DON'T BELIEVE IT! LOL

My guess is he will still be negative at 20 million subs and growing rapidly.

Above post was mine. Sorry, forgot to type my name in.

I disagree that no-one wants PNP units. That is a stupid claim to make. Unless you are a Sirius fan then I completely understand. Not everyone owns a flatbed, which you need to tow one of those things around on. Although they do make good space heaters...sales should pick up as we head into winter.

>>>>> My prediction - 1 year from today Arbitron ratings will show close to 3 million listeners for Howard 100 and Howard 101 combined.

That's possible if the merger happens. Stern is a key motivating factor in Mel's need to merge with XM. He is the most underutilized asset in the sat radio business, and a quickly wasting one (with only 3 years to go on his contract). Mel had to do SOMETHING to try and turn him into a productive asset.

Without the merger, he will still be sitting at 1.2 Million or thereabouts. If, as I suspect, SIRI's OEM conversion rate is extremely low, he could well have substantially fewer listeners than today without a merger.

My prediction is we will have no point to post on here anymore. The merger stinks. No favorites; we will all be listening to the same crap. Please God let XM channels survive. Long Live Lee Abrams.

@StackPointer "Without the merger, he will still be sitting at 1.2 Million or thereabouts. If, as I suspect, SIRI's OEM conversion rate is extremely low, he could well have substantially fewer listeners than today without a merger."

You obviously have never followed media. Radio audiences for premier content gather over time. It has happened this way since the beginning of radio. Howard is no fad. He is a 25 year radio brand. Audience will gather over time. Absolurtely no question about it. Between Howard 100 and Howard 101 they have about 1.7 or 1.8 million listeners. With or without the merger that should be well over 2 million next year. With the merger maybe even over 3 million.

>>> Radio audiences for premier content gather over time.

Stern's audience-gathering days are over. He is a vastly overcompensated has-been, and his inability to keep SIRI's retail demand afloat proves it. There is nothing that can happen short of the merger to make Stern a profitable property for satellite radio.

To suggest that his audience will "gather" is silly; the entire concept of his hiring was that he would bring his 20 million with him. What happened? Why did SIRI's retail net adds bottom out at a paltry 64K last quarter?

Think about that: Stern's average monthly paycheck is $12,500,000. And last quarter, he averaged bringing in 21,000 net new subscribers each quarter. That's $600 per net new retail subscriber. And you say his audience is "gathering"? His audience is evaporating.


Audiences grow over time only until the product has matured which, in Howards case, happened long ago. He was no fad but then again, neither was Imus. Audiences decline over time in every entertainment field. Every TV show, movie sequel, rock band, all lose their audience to the point where they pack it in. Most of the people that used to listen to Howard have stayed with FM and moved on. And while you may think he's outrageous, fact is young people don't. His show is not growing with the young demo and his audience is aging. I recently put the show on with my mother in the car. For a second I thought she was going to be angry. After about 10 minutes she said "This is the howard stern show? This isn't very blue at all." Now I hate my mother's use of the word "blue" but it shows that even an uptight older woman thought the show was milquetoast. And in Howie's case, even 3m subs would not cover his payday which is closer to 1 billion after all bonuses and stock options are awarded.

you know, i read posts from very emotional people like stack or pfreak and you dont have to think really to figure out what service they have
I do think Sirius overpaid for Howard BUT...
Sirius would have probably failed and been aquired by XM long ago if it wasnt for Howard--It was a desperation move--and it worked..(maybe not financially yet but subs wise)If you look at what they had in subs BEFORE and now--see the huge growth--He not only brought in more subs but gave sirius recognition---something XM only had before Howard--He actually helped XM too--Now i know the Howard effect is almost spent up but we wouldnt be taking about a merger of "equals" had it nor been for hiring him--What if XM had him instead--Sirius woudl have gone under long ago

First I have both services but much prefer XM, their music blows away Sirius. And had XM hired Howard for the same deal both Sirius and XM would be gone by now.

And Gary, I agree with your post regarding Howard keeping Sirius alive long enough to try to merge but if it doesn't go through Sirius is fucked. I also noticed that rather than reply to any of my points about show's and stars aging and no longer attracting the audience they used to, you just called me very emotional. It's hard to fight the truth isn't it?

Just a quick thanks to MikeP for bringing up the old "Sirius PNPs are huge" attack. It's been a long time since I've seen that one (almost as long as it's been untrue), and it brought back many good memories.

Man you guys don't follow media at all. You think Stern's audience last year on Sirius was anywhere close to what it was this year? You think next years will not grow significantly? Long lasting brands in radio are so hard to come by. Stern's #1 rated show has lasted over a quarter of a century. You think his audience won't continue to follow him to satellite and gather over time? You simply don't understand the media that is radio then.

This ain't technology folks. Its radio. Not hard to figure out.

>>> Now i know the Howard effect is almost spent up but we wouldnt be taking about a merger of "equals" had it nor been for hiring him

This is an excellent point that I don't really ever mention, but hiring Stern *DID* put Sirius on the map. So, I think that's fair enough. But to what end?

SIRI lost 1.1 Billion last year, 863 Million the year before (both after having hired Stern and received the benefit of his publicity). And yes, the merger is roughly one of equals. So, two years after hiring Stern, SIRI has lost $2B rather than a projected 1B. And they get to merge with XM which creates a company that will continue losing money for the foreseeable future.

I just think you have to tell this to the Sirius shareholders who bought at $5, 6, 7 or higher when Stern was hired and when SIRI shares consistently topped the most actives; with Merrill's Mancini (now history) and Kit Spring pumping SIRI like there was no tomorrow. Tell them how much better off they are from the hiring of Stern. IF they're lucky, they'll see enough of a pop when the merger is announced to bail out without a huge loss after 3 years.

When you bring it to the bottom line, Stern is a key reason Mel had to have the merger. The reality is that he is an underperforming asset, one which is quickly wasting (now nearly 40% used up), he has refused to do any terrestrial radio, and Sirius just doesn't have enough listeners to warrant the cost. So, Mel reasonably wanted to spread that cost over more listeners, and one way of doing that is merging with a company who has listeners. There is nothing surprising about this; I posted about it as long ago as before Stern's hiring.

Is Stern THE reason for the merger? He is a significant portion of it -- SIRI foolishly gave Stern 10-15% of their revenue. When you rake that much off the top, you have to do try to figure some way to spread that cost over as many listeners as possible.

Refuses to go on terrestrial radio??? You think sharing talent with your main competitor (terrestrial ) is a good thing? Go follow another industry Stack. You know absolutely nothing about media. Exclusive content is what the whole business is based on. Go away!

>>> Refuses to go on terrestrial radio??? You think sharing talent with your main competitor (terrestrial ) is a good thing? Go follow another industry Stack. You know absolutely nothing about media. Exclusive content is what the whole business is based on.

Yeah, we see how well Stern has worked out as a Sirius exclusive. Two Billion lost in two years. Stagnated growth. Forced into a merger as one last Hail Mary. It has worked out great.

You, the great media expert, seem to have difficulty in reading financial statements. Because SIRI's have been nothing but blood and gore since the minute he was hired.

well, pfreak----I think eventually(3 years?) they will be profitable(both), but with the continued dominance of sirius over XM(if trends continue sub wise) if you say sirius is fucked without a merger, then where is XM??????????? ohoh
ps--i own both

Stack - Sirius wouldn't have been in existance today if they didn't get Howard. They would be bankrupt. Howardwas the single best financial decision they ever made. Please go follow another industry. Media isn't your cup of tea.

>>> Stack - Sirius wouldn't have been in existance today if they didn't get Howard. They would be bankrupt. Howardwas the single best financial decision they ever made.

As proof it was a bad decision, I have repeatedly pointed out SIRI's 2 Billion in losses over the two years since his hiring, contrasted with a projected 1 Billion before his hiring. That seems pretty compelling. Last quarter, SIRI's retail hit rock bottom; even your buddy Mel says he is "perplexed"; had they not had the bogus OEM subscribers on dealer lots, they may have had fewer net adds than XM on a smaller subscriber base (which shouldn't happen, given churn on XM's larger subscriber base).

What do you have to support your argument?

I think you had better quit "following" the media business and start following something you understand. Have you considered the airlines? They are the only other business I can think of that considers staggering losses to be a glowing success.

Surely, a Summa Cum Laude accounting graduate (LOL) has SOMETHING to back up his claim, no?

This is what I have to support my argument Stack- And its very simple and clear cut -

Stern signs with XM (who wanted him as well) instead of Sirius in 2004. Xm has over 12 million subs today and Sirius has about 2 or 3 million subs that would be worthless since Sirius wouldn't exist today, and those subs end up going to the only sat radio company that survives - XM.

Stern was the best financial decision Sirius ever made. They are buying XM because of that decision.

This aint rocket science folks. Yes Stack, I am more educated in accounting than you are. But I am also smart enough to know when you are following media its important to do your homework on media.

MUSCLE, Sirius are bankrupt today. And they are that way because of Stern's signing. His #1 rated show hasn't been the #1 rated show in years. XM wanted him too but only at 10 -15m/year. Had they signed Stern, Sirius may be out of business but at nearly 1 billion dollars/year, XM would be too.

Gary, that's why Sirius is fucked w/o the merger. XM isn't saddled with massive debt to one personality that has 3 years left on his contract, has a show which is in decline and is the entire face of the company. XM have many more subs and are much better positioned to survive w/o a merger. Sirius are done w/o it. Wow, with a merger Howard may have 3 million listeners? Whatever happened to his 20m that were all going to Sirius?

Single point of time analysis. Not media analysis. You think it stops at 3 million listeners. No way. Not a chance. And watch what happens after the 5 year deal. Mel and Howard have been working together now for close to a couple of decades.

Anybody who followed Howard's ratings prior to staellite radio know he was gthering audience for over 20 years and his show wasn't available in half the country.

And to say he doesn't work blue??? His audience has always been yuppies and professionals for goodness sake. Upscale NY professionals as a matter of fact. You think his audience is lowlifes?

Pfreak - 3 million listeners @ $12.95 per month =

$466,200,000 per year

After the 5 years are up Howard will be in his 60's. He will either retire, want more money than he will ever get again or just go back to FM where he can be relevant and talked about again.

I have followed his show for over 20 years and it has been losing listeners for years before coming to Sirius. His show has no edge. Used to. He does the same show on Sirius that he did on FM but now says fuck. 20 years ago that was an edgy show, today it's weak at best. As much as I like Artie, he's not an edgy guy and his addition to the show along with many other members leaving has added to the shows decline.

And his audience has always been a mix of professionals and blue-collar, just like all the other shows out there. If he can't even offend my uptight mommy his balls are gone.

Muscle, now you've shown your complete ignorance. The math isn't anything like that simple. Sirius loses money on every subscriber Howard brings in.

PFreak - I have been following Howard's career closely for over 20 years. The syndication of Howard's show across half this country took almost a decade and his rise to #1 in markets sometimes took months and sometimes took years. His audience was gathered and growing across the country for decades and I have the ratings reports to back it up.

Enough already with this nonsense. Doesn't anybody here follow media at all???

>>> Pfreak - 3 million listeners @ $12.95 per month =

>>> $466,200,000 per year

Muscle, no accountant (let alone an honors student like you claim to be) would make a remark like this.

1) Stern doesn't have 3 million listeners. And he isn't going to, ever again. The numbers are out, and they aren't impressive.

2) The revenue isn't $12.95/month. It is closer to $11/month. Never, in sat radio's history, has ARPU been at $12.95/month.

3) Even if your remark was correct (which it isn't), revenue > earnings. There is this little thing called operating expenses, part of which is the $200+ it cost Sirius to get most of those listeners. Add to that the money SIRI has to pay for incremental other content costs, revenue share, customer service, and a mountain of other costs, it is becomes quite clear Sirius will never break even on the Stern contract.

4) Sirius lost 1.1 Billion last year, and 863 Million the year before -- the first two years after having hired Stern.

Ryan - I have to say you have some guys around here that follow media like Tankedsecondchance and Homer. But Ryan................WHERE DID YOU FIND THESE OTHER GUYS? Its almost unbelievable what I read in these comments............. I mean please..... for goodness sake!

@Stack - Stern doesn't have 3 million listeners. And he isn't going to, ever again. The numbers are out, and they aren't impressive.

Mark my prediction Stack. This time next year Arbitron will show 3 million listeners for Howard 100 and Howard 101 combined.

Good Night!

Muscle, you're right, I know nothing about media. I only work for one of the largest media companies on the planet. But you're right, it did take howard decades to become what he was, he was no instant hit. It's unfortunate that his show, like every other entertainment product has coasted, gotten stale, lost listeners and hasn't been gaining them in years. Like the tobacco companies, his listeners are getting old and dying.

You have the ratings reports for the past 2 decades to support your Stern show arguments? And you're asking Ryan where he found me? You sir are a real douche.

looks like the fcc granted a higher level of document protection as requested by by sirius and xmsr as of today the order was released by the fcc..

and yes it includes everything that relates to interoperal devices

"Now we also have special populations (older adults, overweight children and teens, the disabled), people with health challenges (weight, heart, multiple sclerosis, fibromyalgia), and all those groups are each looking for something that will fit their challenges as well as their likes or interests," O'Connor says. / p Fusion- type classes that blend different disciplines such as yoga and strength training, yoga and cycling, Pilates and strength training are hugely popular and will continue to be, O'Connor says. ...