Official Sirius-XM merger concessions made public - Orbitcast

Official Sirius-XM merger concessions made public

| 52 Comments
XM / SiriusThe official concessions by Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. have been made public by the Federal Communications Commission.

Previously, these were "unofficial" in that we never saw proof of these concessions in the FCC's database, but FCC Chairman Kevin Martin did confirm the reports yesterday.

Thankfully, the reports are accurate, so much of this we've seen already. But here's a breakdown of the voluntary commitments:
  • A La Carte packages - made available 3-months after merger is consummated.
    • 50 channels, for $6.99/month (add channels for $0.25/each)
    • "However, in no event will a customer subscribing to this a la carte option pay more than $12.95 per month for this programming."
    • 100 channels for $14.99/month.
  • Other programming packages ("Best of Both," Discounted Family Friendly, Music or News or Talk) - also made available 3-months after merger goes through.
  • Broadcast infrastructure set-aside:
    • 4% from Sirius, and 4% from XM - approximately 6 channels each, or 12 channels in total.
    • Set-aside for noncommercial, educational and informational programming within the meaning of 47 C.F.R § 25.701(f)(2) of the DBS set aside rules.
  • Additionally, within four months of the merger, MergeCo will enter into long-term agreements (leases) for 8% of Sirius-XM broadcast infrastructure to a "Qualified Entity or Entities."
    • "As digital compression technology enables the company to broadcast additional full-time audio channels, the combined company will ensure that four percent of full-time audio channels on the Sirius platform and the XM platform are reserved for a Qualified Entity or Entities; provided that in no event will the combined company reserve fewer than six channels on the Sirius platform and six channels on the XM platform."
  • Open Device Access
    • Licenses made available within one-year of merger.
    • "Each licensee shall be responsible for, and bear all costs associated with, the design, development, manufacturing, including parts procurement, logistics, warranty, sales, marketing, and distribution of such satellite radios."
  • Service to Puerto Rico
    • Available within 3-months after merger
  • Interoperable Receivers
    • Available within 1-year after merger
  • Price Freeze
    • Sirius-XM will lock in all the packages, including base and A La Carte packages, and will not raise prices for 36-months after the merger.

[Read the Full Filing (PDF)]

52 Comments

Do bullets 3 and 4 mean that eventually we will lose 12% of the spectrum to special interests?

I think that the 12% setoff for special interest groups was a sort of safety plan in case the merged company figures out a way of adding a lot more channels to their overall lineup. It would not surprise me if the merged company doesn't figure out a way of multiplexing up to 999 channels on the current carrier compared to the current 130 or so channels. I don't ave any reservations about the concessions that XM-Sirius is being asked to give. They then simply have to figure a way going forward of making a profit with the new company. If there's no profit then the whole merger thing will have been a waste of time and money.

I read the full filing... Something IMPORTANT that you missed Ryan:

"The Qualified Entity or Entities will not be required to make any lease payments for such
channels. The combined company is willing not to be involved in the selection of the
Qualified Entity or Entities. The combined company will have no editorial control over
these channels."

Does this mean the EXPANSION of channels when compression technology allows, or is it saying that the set asside will be given up free of charge??

The other good thing that I read about the set aside is the fact that it is based on FULL TIME CHANNELS, not a percentage of bandwith. So all of those NFL/MLB/NHL channels that are not broadcasting 24/7 are not counted. That is a good way to calculate.

"Qualified Entity or Entities."

you mean the crying black folks who want free hand outs?

"and will not raise prices for 36-months after the merger.'

GEE US Christ....when was the last time some kind of enforcement like this was attached to a merger....Yea GG things like ATT/Exxon/Etc....never happened...

As bandwidth increases, I'm sure there'll be enough room for everyone to have their channels, and both services will be equally represented. I don't exactly like the idea of having these groups having their own little channels, but hey if Bruce Springstine can have his own channel on Sirius, why not? I'm almost positive that sports and the 2 entities people constantly fight over on this site will cost a bit extra, which I don't mind paying extra for. Hey, you pay extra for HBO on your TV and if you listen a lot it can be justified. If not, you don't pay it and just listen to the stuff you do like. Imagine that, what a novel idea!

Why are the stocks reacting more positively. Any thoughts.

Jon

once the merger is official it will be more positive John.

Because the merger has not been approved as of yet. Still need two more votes from FCC commission. Also, the earlier report on orbitcast about the merger under fire isn't helping either.

Now, let's see how many of THESE concessions and conditions Karmazin tries to walk away from with a wink and a nod, just like he walked away from the previous set of conditions which were applied to Sirius' license at the outset! As long as these conditions have NO TEETH, they probably will not happen.

The concessions are just about what I expected from all the information over the past 454 days. Open Access will bring in more innovative radios, which is very important to SAT radio. The % set-aside is good as stated.... GeorgeTown needs to get real. The 3 year price freeze is a bit extreme, especially in today's economy... but if it's necessary to get the deal done then I'll buy into it. I've got a lot invested in this deal and still remain very positive about the new Sirius and it's long term potential. I think Mel will take this new company to the next level and beyond.

I understand those concerns. I guess I am just surprised that a majority of the market is still concerned.

would be great if they gave all this bandwith to korean's, spanish and american indians

LOL@BlackWelFare

Ouch, no rate increase and haveing to offer reduced packages. I my opinion many existing customers will jump on the lower price point. Considering the built in SAC it is going to be a major drag on the numbers. I agree that they will bring in more, but the expese cut's will not be quick enough to offset this reduction in cash flow.

Ouch, no rate increase and haveing to offer reduced packages. I my opinion many existing customers will jump on the lower price point. Considering the built in SAC it is going to be a major drag on the numbers. I agree that they will bring in more, but the expese cut's will not be quick enough to offset this reduction in cash flow.

NO! to Melvin Alan "Mel" Karmazin's "merge" scheme. Nothing above is pro-consumer, nothing above is pro-satradio industry.

NO! to Melvin Alan "Mel" Karmazin's "merge" scheme. Nothing above is pro-consumer, nothing above is pro-satradio industry.

Wasn't some of the selling points rates wouldn't increase and we'd have more choices at lower prices with a la carte? Now it looks like some of the shareholders don't like the idea of that.

Not Good the more bandwith Sirius has the less compressuion needed and that translates into better sound.
Full time channel so every channel turns off one minute each day. What full time channels????

Sirius had better be able to make good money for those channels we paid for that bandwith.

Why are the Blacks bringing back the race wars Sirius has something for everybody the blacks should be happy that those channels are in every state thanks to sat radio.
They even have black TV just try White TV and you will see how upset they would be

They even have black TV just try White TV and you will see how upset they would be
========================================================

I have always wanted to start the American Caucasian Collage fund... to benifit some sliver spoon born white kid who does not need it... Just to see how many protesters it would attract.

Diclaimer.... I'm not Racist... I hate EVERYONE !


OK.. back to reality...

way too much in concessions--and why shouldnt they lease out the channels(i think i read they wont be charged for the use)

Time for Primosphere Limited Partnership to come out of hibernation.

The way I see it if the channels that the "Qualified Entity or Entities." should an extra cost, this way if you want to hear that crap, pay for it, and knowing that probably no one will pay for it they could just go away with thie tails between thier legs knowing that all thier crying airtime and channels was for nothing

Heh, all these guys saying nay to the price increases prove that there's more of a stockholder influence here than a consumer influence.

To the AC "No to 'merge' Monopoly" guy--how are these concessions NOT consumer-friendly? I'm a critic of the merger too but better pricing seems nice--they can't raise prices for 3 years.

Although if prices are lower how much you wanna bet ads start creeping in...

With that many concessions and all this time the NAB and others whining and spending so much time and energy to fight the merger, this company, Sirius Sat. Radio, is going to be HUGE, MASSIVE, COLOSSAL...in the STRATOSPHERE!!!!! Strap in and hold your hats!!!

In an interview Mel just confirmed the new company name will be XM Sirius Radio

I"D call it Xiruis :The Testicle Radio Killer

I love open source for the radios but if the merged company is going to take the pussy route with the RIAA and cripple their recording capabilities ie the Stiletto, who cares?

JRT, if you look at the way the a la carte is priced, you will see that many consumers will indeed pay more for less. And that doesn't include the cost of a new receiver. How is your choice of 100 channels for $14.99 a good deal when you can get the entire service for less? Add in Howard or O&A and you're looking at $20/month for 70 less channels than you get now. Fantastic.

"How is your choice of 100 channels for $14.99 a good deal when you can get the entire service for less?"

These are 100 channels from either service which would cost you $25.98 to have the entire thing....so yeah, it's cheaper.

There is more educational and minority statiosn on sat radio then Terrestrial radio F that argument. They even have an all black comedy station. Also once this merger gets finalized, which I think is pretty much a sure thing now, Sirius and XM will be able to make money alternatively. But just the savings alone will be great. With the first interoperable radio I dont doubt a huge spike in new subs. On top of that a high percentage of old subscriber will be upgrading. I dont know if they make or lose money on the units but that could be the first jump they need. I just hope they come up with a deisgn that can compete with the ipod.

I hope to see a huge growth spurt for the industry.

These concessions are pretty much what was expected. A small percentage higer than expected for lease, but not too much to make a difference.

I think the reaction shown in the stock price was more related to the fact that, unless you get your news here or at SiriusBuzz, it was being falsely reported by most outlets that Maetin's opinion = approval. Once the realized it's still not completely done, people that got in yesterday got right back out today.

These concessions seem about what we expected, but many are unfortunate.

It is too bad that minority groups get a hand out on SDARS, but there's no such concession on Terrestrial. How is that fair?

Also, with new forced channels and no increase in bandwidth, how is sound quality going to be afterwards? It isn't so spectacular now.

On another note, as an investment, the price freeze pretty much guarantees no major boost in revenue stream for 3 years. The massive falling ARPU will cancel out any new influx of subscribers....and that's assuming that SIRI-XM attracts a ton of new subscribers in the next few years. With the downward economy, this doesn't look good for the near future.

The new company better be putting SDARS in EVERY vehicle possible now. Things will look good IF they can make it past the next 2 years.

One thing that the merged companies will now be able to do is eliminate the month- to - month subscription option and only offer annual and multi-year contracts (with automatic renewal) similar to what the cell phone and satellite TV companies are doing. This will have a huge impact on churn and the need to constantly pump money into new subscriber acquisition. This should have a major impact on the bottom line. Nothing I’ve heard so far prevents them from doing this.

I don't understand these arguments about Sirius being more diverse ... I've already got a shit load of channels I can't listen to because they're in foreign languages ... not bad, but good ... diverse already, wtf!

My other thought is I don't know if I wan't ANY of the XM channels, I'll take the sports, they can keep the rest!

Jone's N Joe,

If all you want is sports why bother with satradio? ESPN Radio
http://www.radioink.com/HeadlineEntry.asp?hid=142404&pt=todaysnews


By the way IF Melvin Alan "Mel" Karmazin "merge" scheme gets approved it will cause more churn than satradio has ever seen. Educated consumers don't like supporting scheme's and monopoly's. Prices go up, choice is taken away, and talent and content slowly goes away.

JA he's my man... if he won't vote yes, no one can! ......I'm a country boy!!! .... Rural America is letting its voice be heard in favor of the planned Sirius/XM merger. In a joint letter to Federal Communications Commissioner Jonathan Adelstein five independent groups cited increased benefits for rural consumers including greater programing options and enhancements to rural information services. The organizations are the Federation of Southern Cooperatives , the League of Rural Voters , the National Latino Farmers and Ranchers Trade Association , the Intertribal Agriculture Council and the Oklahoma Black Historical Research Project . Said the letter, "This merger is clearly in the best interest of rural consumers because it would allow a combined company to expand upon its existing services with increased efficiencies, and at the same time provide rural listeners with more diverse programming and lower pricing."

What could happen with the pricing is that people might jump on the lower price programming tier but with the ability to get exactly what you want (hello sat tv / cable are you listening) there might be more people jumping on the satellite radio bandwagon... ask the NAB.. is this what you were afraid would happen??

I have Sirius, wifes new Saturn has XM, Will I be able to change one of the Subs to the add-on deal for 6.99. after the "MERGE"

Actually, it's not a total price freeze.....if you read the document there's a slight loophole. It says: Notwithstanding the foregoing, after the first anniversary of the consummation of the merger, the combined company may pass through cost increases incurred since the filing of the combined company’s FCC merger application as a result of statutorily or contractually required payments to the music, recording and publishing industries for the performance of musical works and sound recordings or for device recording fees.

I can see it all now.... "The Plowboy Channel" .. staring Plowboy and the Country Hayseeds.

In the nine O'Clock hour, we'll be discussing how to sharpen your plow without cutting yourself. At 10:00 O'Clock, join our host Slippery Dick Wentworth for a discussion about synthetic lubricants. At 11:00 O'Clock, Harry Grape and the Bunch will be reviewing commodity prices crossing the Chicago Merch.

Ah.... fame, if only I were a black man. I could have a huge whanger AND get free channels!

there's been nowhere stated that a la carte will allow for channels from cross platforms beyond "best of" which are selected for you. And if the merger is to create these efficiencies then many channels will be cut so even if cross platform a la carte were to allow for picking stations from either service you're picking from a smaller pool of channels so....yeah, you're paying more.

Time for Primosphere Limited Partnership to come out of hibernation.
Posted by: Aegrotatio | June 17, 2008 3:46 PM


YES! Thank you! Go Primosphere!

"50 channels, for $6.99/month" Wow what a great deal!, wait I get 170 for $6.99 a month, so they will raise prices!, What a bunch of freakin lairs Thank God for i pods! as the FM like music play lists suck and it is NOT what it used to be as far as music selection. Way to ruin a great concept you freakin idiots!!

LAPTOP GAMER- how do you get all 170 channels for $6.99? Would that be because of family plan discount? If it is then maybe you should compare apples to apples.

NOBODY EVER said that it would be a GREAT deal if you look at the price per channel BUT if you look at your out of pocket expense month after month then it would be a GREAT deal. If you pay $100 a month for cable and get 100 channels and you only watch 25 of them you are getting ripped off compared to only paying for those 25 channels and you pay $50 a month, that is a DEAL.

Why do you think the Costco's and the 7-Elevens of the world can thrive together? You are getting the same thing but paying more for what you use. I am not going to buy 4 bottles of ketchup when I can buy 1 for a little bit more per unit.

When you go to a Costco, 7-Eleven and a grocery store start comparing unit pricing not the actual price and MAYBE you will understand what I am talking about.

"As bandwidth increases, I'm sure there'll be enough room for everyone to have their channels, and both services will be equally represented. I don't exactly like the idea of having these groups having their own little channels, but hey if Bruce Springstine can have his own channel on Sirius, why not? I'm almost positive that sports and the 2 entities people constantly fight over on this site will cost a bit extra, which I don't mind paying extra for. Hey, you pay extra for HBO on your TV and if you listen a lot it can be justified. If not, you don't pay it and just listen to the stuff you do like. Imagine that, what a novel idea!"

True but there are two ways (or more) to look at it.. first you pay for what you want, and through this the companies find out directly what people are listening to, no more ratings guess work here... the second is that satellite tv did try this at one time, or I should say dish network tried this but can't offer this anymore, the reason is it shows directly what people are willing to pay for and watch and they can't have that.. there are only maybe fifty channels on the satellite (dbs) that I might watch.. same with the radio and will they keep the channels that are way too niche or will these be replaced with more of a mainstream music (on the rocks, special xm, to name a couple) or will the pricing be all inclusive like the early high voltage was a premium channel but then was included in the full programming package... I see the ala carte working for about maybe a year, maybe.. then reshuffling so you pay more for less and then less for nearly nothing (ala the crap the brothers want up there).. I can see subscriber numbers sky rocketing in just the first year of the merger to nearly double what they are right at the closing of the merger, but that would take a special promotion by the company, and since they are nearly broke that won't happen and so the numbers will trickle upwards slowly as the battle for listeners goes forward...

When ever a company becomes a monopoly it can caherge what it wants, so wxpect lousy service and higher prices.

Is channel blocking available? Possibly only for explicit channles but I will demand these minority channels be blocked from my receiver. I dont need that.

LAPTOP GAMER- You are absolutely right. I can't wait until they raise the prices to say $20 (not including inflation) a month anf I continue to pay them. Your delirous. Enjoy YOUR play lists on your MP3 player. I am too lazy and have NO time to worry about what is going to be on the radio.

SteveC from Yellowstone- I sure hope so as that is the first thing that I will be doing once these channels become available.

On the other hand I would love to be able to listen to the "Community Cop Show" Very compelling radio and great COALLARS (sorry I am not sure how to spell "callers" like the host pronounces it)

@

You are full of excuses for "merge" MONOPOLY. Post again when you grow up and learn something. Laptop Gamer is CORRECT.

"AC" You are absolutely correct. Thanks to a your wisdom I going to cancel my subscription.

How is what I wrote an excuse? Nevermind I guess I am a sucker like you said I will pay whatever they want to "charge."

And really what the hell is the point of the quotes around merge.

Any word/thoughts on how lifetime subs will be handled? I paid $400 for mine, and I'm a little worried because I don't see any mention of it in any of the filings.

Monopoly?????

How is this a monopoly?

You have a million choices in radio content. This isn't a service that people can't live without, like utilities.

This is no more a monopoly then your choice of cable TV providers. There are (or at least were) many communities that ONLY allowed one choice of cable TV provider. Cable companies enter exclusive contracts with apartment complexes. You have zero choice in providers, trhe choice is broadcast TV or "X" company cable.

Before Sirius launched, and the only provider available was XM, were they considered a monopoly? Did the government take them to task for anti-trust violations?

There is nothing stopping another start-up from launching their own Sat. Radio company.

There is no restraint of trade.

I only listen to about 1/3rd of the sirius channels for about 12.99. Id be very happy to pay to 14.99 for 100 channels. And for minority programming: theirs several spanish language channels and a korean channel,

Also, for both company to merge, their is no monopoly. A dumbass would figure that out as he picks up his "iPod". and it takes a bigger idiot to see a monopoly in the merged companies, Example: National Association of Broadcasters.