Source: Surrendering spectrum is the "end game" - Orbitcast

Source: Surrendering spectrum is the "end game"

| 47 Comments

NAB
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.

47 Comments

This merger has made one thing crystal clear to me, the NAB are even bigger douches than I ever imagined...

Congrats on the scoop, Ryan

Correct me if I'm wrong, but aren't all the a-la-carte pricing packs based on the channel lineups remaining mostly the same, meaning minimal loss of content overall? If they surrender spectrum, and I have to sacrifice channels l like to make way for the 'survivors' of Sirius, then I'm out. If this is true and this turns out to be the issue, either surrender half or no merger, which is more likely to happen? I fear (and expect) the former.

Surrender of spectrum means the deal is dead. For XM/Sirius, it's all or nothing at all. I suspect they will either have to figure a way to settle between themselves and walk away, or have certain competition whether they want it or not.

Then I want a piece of the action and my neighbor and ...... and. The deal is between SIRUIS and XM and the regulators and isn't contigent on anyone else's (I want, WE want) B.S.

Surrender of spectrum means the deal is dead....................................................................................................................................

Hardly...I am sure the two companies had the foresight to anticipate a long list of concessions that may be necessary in order to facilitate this deal going through. This deal is much more about solvency and bottom line for the future than it is about giving up a small chunk of spectrum, and possibly adding competition via the same delivery.

Merger approval coming soon./ I have always said , although not happy about it , that this delay has been due to working out the concessions.

$$$$$ Come to Poppa!.....$$$$

This is a non-issue. Explain to me how possibly this could be accomplished? There are 17 million radios out there, many in the form of OEM with new cars that are unable to receive anything but XM or Sirius. Are all these radios going to become useless?

Ryan, I don't know where this theory came from, but it just doesn't stick for me. This sounds more like a ploy to me to stop the merger, because I can't see how XM/Sirius can give up any of the spectrum. I also do not believe its the issue holding up the merger, because I have to believe Mel's answer is "No." That takes one second. It just doesn't seem at all feasible. If the radios could magically receive a new signal all of a sudden, that would be one thing. But then, if pigs could fly, we would all carry umbrellas on a sunny day.

Problem is, if they don't merge, one or both will go bankrupt and end up surrendering spectrum anyway, and getting nothing for it. If they give up even 25% of combined spectrum, that's better then only one sat rad company with 50% of combined spectrum. I suspect they're willing to give up more then one might think and the pricks at NAB know it.

Hopefully the FCC sees through this. Give up spectrum to whom? Does this mean Sirius gets some terrestrial airspace then? Why is this always Sirius that has to change what it is doing? The whole point was that doing these stupid things was making it too hard to turn a profit...

NAB are the biggest vultures...

I would imagine any spectrum adjustment may be a small programming matter within the satellites or earth station,and not affect the radios at all....other than possibly needing to move some channels around...not to trivialize the matter...I can imagine some headaches but nothing insurmountable.

BTW...Great graphic!

@rjr: That could be their strategy. If the market is defined as "audio entertainment" then the NAB will try to achieve a concession that would make the merger useless to Sirius and XM.

And if that's the case, then I can understand why there's a delay extending this long. There's likely some strong negotiating going on right now.

Even if that's the case... why don't they just cap the number of stations, and IMPROVE the quality of sound? They have a nasty codec, they know it, and some pipe would help the quality... so keep the spectrum and limit the channels.

(Because after they agree to it, merge, and have the cap, the cap will be illegal under the First Amendment!)

And one more thing!!..

THE NAB SUCKS!

Sirius should still be happy with turning over up to 25% of the spectrum. That'll get rid of the XM fluff, leave all Sirius channels intact, and then give them the rest of spectrum for Sirius Backseat TV.

Nobody is using that NavWeather junk, thats a complete waste. 202 is a waste. All of the XM music is a waste. Basically Sirius is buying up XM, taking baseball and the college sports, and dumping the rest in the garbage.

So screw 25% of the spectrum, or more.

strange because testicle radio has all the spectrum they need to make national HD radio a reality...they just dont want to put the effort, time and money into it.

they would just rather remain stagnet and dead

I know I risk sounding completely retarded, but I'm sure I'm not the only one. What exactly do they mean by giving up spectrum? Can somebody explain the concept. What would change? What would the terrestrials be able to do? It's blurry to me?

Sirius and XM have a lot of overlap in programming and this is where a lot of the savings come from. You only need to produce one channel each of the 40's. 50's, 60's, 70's, 80's 90's.... etc and then feed them via high speed landlines and then upload them to each SAT system. Production cost is immediately cut in half for many stations... however, you still need the spectrum to broadcast them to each system so I don't see giving up spectrum as very viable. We also need spectrum for video feeds, which will undoubtedly increase going forward. Hey, what ever happened to the "Heirarchial Modulation" that Sirius was to deploy and reduce bandwidth requirements by 25% I haven't heard any updates.

Exactly where do people come up with this stuff? Mel came out and said publicly at the last media conference its in the hands of the DOJ and FCC now. Sirius and XM have given them all the information they asked for. Now rumors are starting here that there is some heavy negotiating going on about spectrum? Give me a freakin break Ryan. I don't buy it for one second. Not one second.

NAB can say whatever they want to say. The deal isn't decided on by NAB.

This is what happens when the govt lets things drag on. Silly rumors just keep popping up. There have been at least a million of them in the last few months Ryan.

rjr - I couldn't agree more. Great post.

From reading this entire thread I couldn't help but recall that song - Come on Feel the Noise.

lets just put all the overlapping channels together let o&a have their channel howard his lets have mlb nfl nhl college sports have their channels and lets be done with it. ITS THAT SIMPLE GIVE PEOPLE WHAT THEY WANT. WERE PAYING FOR IT IN THE END

I think Sat radio can fight back with some Free channels ad suported.
If it was up to me i would put up some free stuff no matter what.
So many people are underserved by radio that some free stuff that comes in clear would get lots of radios sold.
Now that the HD Boys have made AM so much worse more than ever people will go for something that comes in clear.

XM or Sirius can not give up any spectrum even if they combine channels they still need to transmit to the radios and in order to keep the channels they have they need the spectrum I.E they drop all of the decade channels from Sirius and broadcast the XM decades they still need there respective spectrum to be able to transmit all there channels. This could be a deal breaker!!!

FCC should allow the merger with all the spectrum. In the future the combined company may need the spectrum to diversify their offerings such as Video, and GPS. With rapidly increasing competition in the audio market, less spectrum could be devastating if they don't have enough spectrum for other ventures. FCC should auction up another 25 Mhz of spectrum so the likes of Georgetown can bid, invest, develop programming, and launch their own satellites.

FCC should allow the merger with all the spectrum. In the future the combined company may need the spectrum to diversify their offerings such as Video, and GPS. With rapidly increasing competition in the audio market, less spectrum could be devastating if they don't have enough spectrum for other ventures. FCC should auction up another 25 Mhz of spectrum so the likes of Georgetown can bid, invest, develop programming, and launch their own satellites.

Sirius should not negoiate any specturm in this deal, possibly new features not released today but in a year or so may need that space. Screw NAB. Screw the Gvnt for dragging on so long with the approval. Get on with it, enuf is enuf!

Video, and GPS...are expendable and I think the FCC will see it that way in the end. Let Sat Rad do what it does best and what it was originally chartered to do- music, talk and sports. If they can do that profitably on a little less spectrum, then that is the way it will have to be.

The Secret Source: Eric Logan's barber... so how SERIOUSLY can you take that guy? I mean, he is blind, isn't he?

Ryan, it should be pointed out the severity of the cut in bandwidth that CCU (and presumably the NAB) are requesting. A reduction from 25 MHz to 15 MHz is very significant... that's a 40% cut in bandwidth.

The key to remember... although XM and Sirius have 25 MHz of spectrum, the way that their respective systems are designed gives XM approximately 4 Mb/s of throughput and Sirius 4.5 Mb/s of throughput. A reduction down to 15 MHz of bandwidth would presumably drop the combined throughput from 8.5 Mb/s to 5.1 Mb/s.

Furthermore, you cannot just take the full 10 MHz of spectrum from one service -- as that is equivolent to 3.4 Mb/s of throughput. If you did, that would all but render one of the systems useless. Instead, you would have to carve out the 3.4 Mb/s proportionately between XM and Sirius. I estimate this to be 1.6 Mb/s from XM and 1.8 Mb/s from Sirius. That amount of througput is equivolent to about 42 music channels from each service. It would be quite a significant blow to the service of BOTH companies customers.

The only way around it would be to combine the remaining bandwidth (the 5.1 Mb/s remaining); and replace ALL existing legacy receivers on both systems (the 20+ million) -- with new ones that would receive a "new" signal that would be approximately 5.1 Mb/s in throughput, using one CODEC and one encryption scheme. You could use an interopable one, but that would be even more expensive. The content on it would be whatever survives from the 2 services going out to "all" customers.

This is the only way to make this kind of concession work -- otherwise, Sirius and XM would have to SIGNIFICANTLY reduce their service to their subscribers. Instead of 69 music channels, it would be more like 25 or so. You could cut the number of talk/entertainment channels -- however, that wouldn't give you many more music channels. The only way to keep the high number of music channels, would be to replace all legacy receivers, like I mentioned above.

So really, a 40% cut in bandwidth MUST be a deal breaker -- as it would require a SIGNIFICANT reduction in service or the requirement to replace ALL of the legacy receivers.

Now, what could happen would be a concession where instead of a 40% cut in bandwidth, they could negotiate it down to perhaps 10%. This would cut about 10 music channels worth of bandwidth from both XM and Sirius... which is a more feasible option. A 20% cut in bandwidth (which is the amount that Georgetown Parnters is asking for) would cut about 20 music channels from each service... and yes, it is just a coincedence that the percentages are equal to the number of channels in my example here. These aren't exact numbers -- just approximations.

This should paint a clearer picture to the type of impact that is being discussed here. I could see XM/Sirius at least "thinking it over", if it were a 10% divestiture... but nothing more. Though I'm not convinced that giving up 850 kb/s of bandwidth would be worth it (if it is 10%). Clear Channel already gets about 410 kb/s of bandwidth from XM, from the old days...


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Brian, the problem is Internet radio is likely to dominate in the future. Bridge Ratings conducted many a study to verify this. When the licenses were originally granted, no one could have imagined how fast other technologies would arrive on the scene. Without the full spectrum to improve quality and quantity of programming, satellite radio could be a thing of the past within a decade. Even mobile video will have competition via the internet.

The easiest solution is for the FCC to auction off more spectrum period!

Ryan:

If I understand, XM/Sirius are to give up bandwidth and spectrum for what? So the folks from terrestrial radio can buy that up? So Clear Channel or someone else can monopolize another method of delivering radio?

I’ve watched this merger thing for a year and been especially tuned in to the NAB and its efforts to kill this. And, the arguments they put forth make me sick. In fact, I listen to regular radio far less than ever before now, in part directly because of the total bullshit they’ve put forth in their efforts. This is unbelievable to me. How about this. XM and Sirius give up 20 percent of the spectrum if NAB members will do the same. Give up 20 percent of the frequency they control across the board so that the public has access to the airwaves. After all, they are public and we should have access to them. Seriously, I have no problem with the satellite companies giving up 20 percent if the members of the NAB will. I know, far-fetched and ridiculous and yet I like the idea.

In any case, terrestrial radio died a long time ago and it can rot for all I care.


I certainly hope it is a deal breaker. If one or both companies need chapter 11 protection than so be it. It's what they got themselves into in the first place with this lavish spending on has been shock jocks and sports and personalities no one wants to listen to on the radio. Instead of improving their music selection. An all music XM/Sirius would KILL anything out on the market today. The popularity of MP3 players and Internet Radio prove that point.

Just finished watching Cramer on Howard TV from this week's radio show. I can't say I disagree with what Cramer said and it fits right in with this post from Ryan.

Basically Cramer said terrestrial radio's strategy is trying to do whatever it takes to delay this merger as long as it can with the hope of destroying the sat radio companies.

So I guess we should expect to see a lot more ludicrous rumors about spectrum divestitures, HD radio inclusion and even more fun concessions for as many months or years as this comical delay continues.

Let's just find out where these guys live and 50,000 of us all write him a letter.
That'll make them think. Each letter should describe how we are going to boycott Terrestrial Radio if they don't let us have what we want in Satellite Radio. We are the consumer.. They work for us.

"Each letter should describe how we are going to boycott Terrestrial Radio if......" ?????

I haven't listened to terrestrial radio for 5 years. First I had XM, but switched to Sirius when they started broadcasting NFL games.

I didn't bother to threaten anyone with a boycott, I simply just stopped listening to the dribble that they were broadcasting. Forget the talk, use action.

"Each letter should describe how we are going to boycott Terrestrial Radio if......" ?????

I haven't listened to terrestrial radio for 5 years. First I had XM, but switched to Sirius when they started broadcasting NFL games.

I didn't bother to threaten anyone with a boycott, I simply just stopped listening to the dribble that they were broadcasting. Forget the talk, take action.

Getting Frustrated with the nonesense wrote:

"Brian, the problem is Internet radio is likely to dominate in the future. Bridge Ratings conducted many a study to verify this. When the licenses were originally granted, no one could have imagined how fast other technologies would arrive on the scene. Without the full spectrum to improve quality and quantity of programming, satellite radio could be a thing of the past within a decade. Even mobile video will have competition via the internet."

Then maybe it's time to admit - and the FCC may eventually be saying as much - that Sat Rad is a failed proposition? I mean, if it can't profitably do what it set out to do in the beginning, why should the FCC continue to allow it (the two companies) the amount of spectrum it currently has?

BTW, the quality of Sat Rad is already VERY good - not just in terms of variety and depth but in terms of actual sound quality...if you are listening to it on good equipment to begin with. It would seem to me that with all the channels that could be cut from overlap in the event of a merger, that spectrum could be 'given back' with not decrease in sound quality.

I am an XM subscriber and I use the radio specifically to listen to sports programming. The bulk of sports talk programming is on AM, which is horrific quality.

I am excited about this merger simply because it will upgrade my selection of sports prorgramming. I do not listen to music on XM because I am not interested in music.

I would venture to guess that while a majority of subscribers to either sat service use it for music programming, there are a great number who listen for the talk programming because it opens avenues not available on terrestrial radio.

I'd be thrilled to see them have to give up 50% of the spectrum in the event of a merger. That way another company can come into the market if they want, ending the monopoly and giving back a choice to the consumer. That way if I don't like the merged company's offerings I have a choice besides canceling my sub. As a dual subscriber for 5 years I don't find canceling after all the support and cash I've given these fledgling companies and all the hardware I've bought to be an acceptable option. And the merger taking so long is killing XM/Sirius? They should have anticipated that when they went into this. The government bailing them out of poor decisions and out of control spending at the expense of the customers is bullshit.

Forfeit spectrum is something that both companies will WANT to do anyhow.... why have two sets of birds?

The deal is this..... giving up this bandwidth in 5 years is a blessing.... time to change over OEM's and phase out old radios giving a credit to those holders.

Costly to "buy out" radios.... you bet.... but less bucks than two sets of birds.
Sirius's spectrum will probably be the one to go.

PS.. Hey Homer... screw you..... you've been 110% worng for 17 months you XM flunkie.

I believe they will want to keep all the spectrum they can for TV. Use the sirius spectrum for radio, use the XM spectrum for sat tv.... which NAB doesn't want.
They already tried to kill sirius's 4 tv channels.

>>>PS.. Hey Homer... screw you..... you've been 110% worng for 17 months you XM flunkie.

Prove what is wrong with my post or STFU... regardless, grow up you fuckhead.

Just to let the NAB,CLEAR CHANNEL,and GEORGETOWN know that you have ABSOUBLY NO LEGAL AUTHORITY IN ANY WAY FORM OR FASHION in a decision on this merger. It is up to the DOJ and the FCC to make this decision and their decision ONLY.The only decision they have to make is where this is a ANTITRUST OR MONOPLY.What you are doing is PURE BLACKMAIL. Each of you are a shame and disgrace to the american people. There will be a complete investigaton on who you have given money to. Stop trying to BRIBE the DOJ and FCC.

Just to let the NAB,CLEAR CHANNEL,and GEORGETOWN know that you have ABSOUBLY NO LEGAL AUTHORITY IN ANY WAY FORM OR FASHION in a decision on this merger. It is up to the DOJ and the FCC to make this decision and their decision ONLY.The only decision they have to make is where this is a ANTITRUST OR MONOPLY.What you are doing is PURE BLACKMAIL. Each of you are a shame and disgrace to the american people. There will be a complete investigaton on who you have given money to. Stop trying to BRIBE the DOJ and FCC.

Hey Alton, come in off the ledge brother. Nobody has ever claimed that NAB or anyone else has any legal authority over the deal. Why shouldn't NAB do its best to represent its members, that's what a lobbying association is for. Also, there's no evidence of blackmail or bribery or anything like that. If that stuff ever worked, the govt would never do anything bad to broadcasters, which of course they do every other day. Boiled down, XM and Siirius have done a lousy job of justifying the merger. The "evidence" they've filed trying to prove that the relevant market is not just sat rad has stunk. They haven't been able to prove any consumer benefits of the merger, other than the things like a la carte that aren't a result of the merger but just something they've threatened not to do unless they can merge. BS like that. So if you want to blame someone, blame XM and Sirius for getting themselves and their investors in this mess.

To JOSE ===Thanks for your polite post about my comment. The only thing that the DOJ has to deside is if this is [A antitrust violation or not] == A very simple decision.When anyone ,including the nab, clear channel or georgetown gives large sums of money to anybody to try to stop this merger and they do everything they can to stop it is [BRIBLEY]. ==BLACKMAIL is someone or some company trying to get something from you or they will use force to get it. [MY OPINION ONLY] This is exactly what the NAB, CLEAR CHANNEL AND GEORGETOWN are doing to the DOJ. I hope the DOJ dosent fall for it.

To JOSE ===Thanks for your polite post about my comment. The only thing that the DOJ has to deside is if this is [A antitrust violation or not] == A very simple decision.When anyone ,including the nab, clear channel or georgetown gives large sums of money to anybody to try to stop this merger and they do everything they can to stop it is [BRIBLEY]. ==BLACKMAIL is someone or some company trying to get something from you or they will use force to get it. [MY OPINION ONLY] This is exactly what the NAB, CLEAR CHANNEL AND GEORGETOWN are doing to the DOJ. I hope the DOJ dosent fall for it.

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