12th
May
The numbers are the numbers, and the charts speak for themselves.
Catch Sirius Buzz Radio Live Each Thursday at 10:00 PM Eastern - Or Catch A Replay Of Any Show
Position - Long Sirius, Long XM
09th
May
The proposed merger of Sirius and XM Satellite Radio has brought to light an urgent need for additional satellite radio spectrum. Only 6 years ago, when the concept of SDARS was barely breathing, no one seemed to care about satellite radio. Companies and interest groups alike paid no attention even though less than $1 Billion could have bought one of these fledgling companies with all debt included.
A few brave institutional buyers, and many small retail investors saw the potential, and absorbed the risk to see if their investment could help a concept grow. Most however, went about their merry way, and never gave satellite radio a second thought. Now, in 2008 the fruits of satellite radio are much closer to fruition. The concept has rooted and begun to branch out. A large portion of the risk has dissipated, and the satellite radio companies are better able to weather the storm. It is at this point that a crisis has now enveloped the industry.
THERE SIMPLY IS NOT ENOUGH SPECTRUM:
- Primosphere wants 30%
- Georgetown Partners wants 20%
- The National Hispanic Media Coalition wants 15%
- Clear Channel and others feel that 50% should be given up.
Already we are over 100%, and this presents a problem. To solve this problem, we will break down the spectrum by category. According to the US census and other data (see links for source):
- White Americans represent 67%
- Hispanic Americans represent 13%
- Black Americans represent 12%
- Asian Americans represent 4%
- Native Hawaiian or Pacific Islanders represent .14%
- American Indians and Alaska Natives represent .75%
- Females represent 51%
- Gays and Lesbians represent 1.16%
- Senior Citizen Population represents 13%
Wait a minute, all of this adds up to 162%, and we have not even gotten into religion yet!
I have a solution. When SDARS was first being considered in 1995, there was 50MHz of spectrum being considered by the FCC (2310 MHz through 2360 MHz). At a point late in the process, 25 MHz was held back. As it turns out, now that everyone realizes that SDARS is viable, that additional 25 MHz of spectrum is badly needed. Perhaps another solution would also be workable. The WCS spectrum has not been used for quite some time. Perhaps carving up that spectrum would make use of it and solve all of the issues that WCS has been dealing with.
09th
May
The National Association of Broadcasters has had a meeting with the FCC. Interestingly, the positions of the NAB, when thought about from a business perspective seem odd.
#1 The NAB states that the merger would harm consumers by removing incentives that XM and Sirius currently have to offer competitive rates.
- If SDARS became more expensive would terrestrial radio benefit because less people would be listening to satellite radio?
- If SDARS already is only able to keep half of those that try the service at current prices, what percentage would that change to with higher prices?
#2 The NAB states that satellite radio would lose the incentive to provide unique and diverse programming.
- If SDARS were to stop providing unique and diverse programming, wouldn’t that benefit terrestrial radio?
- If the programming suffers, wouldn’t it become more difficult to raise prices as the NAB outlines in point #1?
- Satellite Radio already has diverse programming, and has committed to providing more.
#3 The NAB states that SDARS would lose the incentive to produce innovative equipment.
09th
May
Another organization has come forward in an effort to seek spectrum as a concession in the proposed merger between Sirius and XM. The National Hispanic Media Coalition stated in a letter to the FCC that should the merger be approved that 15% of the spectrum should be set aside and dedicated to Latino programming. The NHMC arrives at the 15% figure because that is the percentage of the American population that is Hispanic.
It seems that groups are trying their best to see to it that the ownership of SDARS equates to the population of the united states. While this idea may seem noble, there simply is not enough room to make all of this happen. What if women want half of the spectrum, the gay and lesbian community, African Americans, Hispanics, American Indians, Asian Americans, Muslims, Baptists, etc. all want their piece?
Ownership of SDARS can already take on any characteristic. People and organizations can BUY STOCK. It is a pretty simple concept, and one that seems to be getting lost in this whole process. I am sure that the NHMC does a fine job at what they do, and that they seek to better the position of their membership, but at some point we need to ask ourselves where all of these groups were when SDARS was a very high risk investment.
Position - Long Sirius, XM.
09th
May
The Minority Media and Telecommunications council recently had a meeting with the FCC regarding the proposed merger between Sirius and XM Satellite Radio. In their filing with the FCC, the MMTC noted that they were asked to comment on the merger. The MMTC response was:
“MMTC has not filed comments in this proceeding and does not plan to do at this time as the merger does not appear to have a direct, specific impact on minority ownership policy.”
The filing contains some other bits of information that deal with the congressman Towns letter on 8 minority channels. This is the first communication from MMTC regarding the proposed merger.
Position - Long Sirius, XM.
08th
May
Despite the fact that a chip in the Starmate 5 carries the LSI name, there is no contractual relationship between LSI and Sirius. LSI informed us of this today and provided us with a press release detailing the sale of their mobility business to Infineon.
For their part, Infineon was not able to comment on any SDARS connection, but did confirm that they bought the mobility unit of LSI by supplying a press release
Clearly LSI did indeed sell their mobility unit to Infineon. Clearly the Starmate 5 has a chip labeled LSI. Clearly Infineon could be a possible partner in satellite radio.
Recent documents from the Infineon website would at least point to a possible relationship.
Position - Long Sirius, XM. No Position LSI, Infineon.
08th
May
Directed Electronics released their Q1 2008 financial results today, and reported that net revenue from satellite radio sales are up 14% on a pro-forma basis. Now, readers should be cautioned that this reporting method does not mean that sales of satellite radios are up. It simply means that on a net basis, the company is seeing more dollars.
For Directed, Net sales of Sirius radios represented $17,676,000 for Q1 2008 vs. $15,491,000 for the same period in 2007.
“We believe the change to net reporting of our satellite radio sales coupled with providing our security and entertainment and satellite radio product category margins will ultimately provide increased transparency into the fundamental drivers of our profitability,” commented Kevin Duffy, Directed’s EVP and CFO. “In the first quarter of 2008, our security and entertainment business comprised approximately 75% of our total pro forma sales but over 90% of our gross profit due to the combination of our strong brands and innovative products which help both our retailers and Directed to earn solid margins.”
Position - Long Sirius, XM. No Position Directed.
08th
May
The weekly installment of Sirius Buzz Radio can be heard tonight at 10:30 PM Eastern standard Time. Sirius Buzz Radio broadcasts at this time, and if you have missed previous shows you have no need to worry. Each Sirius Buzz show is archived and available for listening at any time. Simply visit Sirius Buzz Radio to access old shows or tune into the live show.
This week we will be talking about the merger, the FCC process, ownership, open access, as well as the first quarter conference calls that are scheduled for next week. This week we want to you the listener to get in your questions, so be prepared and call 347-945-7995 any time during the show.
If you have specific questions that you would like covered, please feel free to e-mail them to satellitestandard@gmail.com
An additional feature is that there is an on line chat room during the show. After the show, I will make myself available for 30 minutes in the chat room to interact with listeners.
Sirius Buzz Radio is growing. If you like the show please spread the word, leave a comment, and rate the show.
See you at 10:30
Position - Long Sirius, XM.
08th
May
Sirius Buzz Moderator Newman penned a great letter to the FCC that I as well as another concerned shareholder wanted to elaborate on. The letter from Newman was first published in the Sirius Buzz Forums and the additionally published by the FCC on their website toady. Newman was responding to an article here on Sirius Buzz, Lawmaker Clarifies Merger Support, in which congressman Rush clarified his position on minority ownership in SDARS.
One item that I pointed out in the original article is that both satellite radio companies are publicly traded. This allows anyone who desires to participate in the ownership satellite radio. In fact, anyone could own as large a stake as they wanted, and could also own enough shares to gain membership on the Board of Directors.
The Newman letter:
To Whom It May Concern:
There has been a lot of talk lately regarding Minority Ownership in conjunction with the Sirius Satellite Radio and XM Radio (“The Companies”) merger. Not surprisingly, the large majority of this discussion is coming from African American Congressmen and businessmen.
My question to you is “Why?” The Companies currently have one of, if not the most, diverse programming lineups available to be heard on one service (if the merger is approved). It would be difficult to find anything comparable, even if you include cable and/or satellite TV. All you have to do is pick what you want to listen to, and you have it.
08th
May
Citing their own meetings with the FCC, as well as statements made by other parties, U.S. Electronics is stepping up on having “Open Access” as a merger concession. In their FCC Filing today, U.S. Electronics specified several conditions which they feel will bring open access to fruition should the merger be approved. Those conditions include:
- Be barred from directly or indirect engaging in or interfering with the design, manufacture or distribution of satellite radio receivers or other digital devices that can access the satellite radio network.
- Agree to quality control testing by an independent laboratory
- Publish and make available information on the technical requirements and specifications of its network, including reasonably advanced notice of any changes to any qualified and willing partner.
- Not interfere with consumers access to, or their choice of, devices by which to access the network
- Comply with rules and regulations that provide for the compatibility of receivers to ensure that the satellite-radio using public has reasonable and non-discriminatory access to the satellite radio network
- Comply with the FCC’s policy that the public has the right to use any device to access and make use of the satellite radio network, consistent with the principles established in the Hush-A-Phone and CarterPhone decisions.
- Be subject to an independent monitor who will ensure compliance with FCC rules and regulations.
U.S. Electronics also promises that they will supplement their filings with details specifications and implementation of an open access condition.
The theory behind open access is compelling, but if implemented, the conditions should be fair across the board. fair to consumers, fair to manufacturers, fair to distributors, and fair to the merged company. The costs borne out of such a condition need to be considered with all of these parties in mind. My question is not about the theory, but who pays for the implementation of it.
I would add that some other conditions need to be considered should the FCC go down the path of open access.
- The device manufacturer should have a fully staffed customer service that is accessible via telephone for consumers to address any problems they might have.
- Any manufacturer or distributor should participate in the costs to verify quality control.
- Manufacturers should be held to timeline standards for getting receivers to market. Delays in getting product to market can cause measurable impacts on the merged company.
There are many things to consider with an open access standard.
Sirius Buzz Radio - Thursdays at 10:30 PM EST
Position - Long Sirius, XM.
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