SIRIUS XM SATELLITE RADIO NEWS

In a filing with the FCC that can only make Georgetown Partners’ Chester Davenport and entities such as Primosphere smile, the Attorney Generals for Maryland, Connecticut, Ohio, and Washington have proposed concessions to the FCC that would have the company giving up spectrum in a manner similar to that which Davenport and Primosphere have proposed.

The filing states:

“Should the FCC approve the proposed merger, the only way it can preserve valuable competition is to introduce a new competitor to the SDARS arena. Thus, we urge the FCC to require XM and Sirius to lease a portion of their satellite capacity, and the means to broadcast from the Sirius and XM satellites, as a precondition to approving their request to transfer licenses.”

“The leasing solution we advocate is preferable to a simple divestiture of spectrum by Sirius and XM. Construction and launch of satellites to carry a competing SDARS service will require several years. On the other hand, a SDARS service created through leasing spectrum can be made available much more quickly, and the resulting public benefit felt much sooner.”

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In a twist that shows how at least one shareholder feels about Georgetown Partners and Chester Davenport’s requests surrounding the merger, a filing has been made to the FCC in the name of Chester Davenport. Having followed the comments on this merger from the beginning, I thought it ironic that Davenport himself would send a comment to the federal regulator. Upon opening the comment, all I could do was chuckle.

The comment includes statements such as, “Please hand myself and Georgetown Partners 20% of Sirius and XM’s spectrum once you approve this merger. We, unfortunately, do not have the ability or skills to accomplish anything on our own and desperately need a handout.”

Now, I did get a good laugh out of this comment, but do not encourage readers to do something similar. In my opinion, comments to the FCC need to be serious in nature and address the real concerns of consumers whichever way they feel about the merger.

The Davenport Spoof Comment

UPDATE Looks like the spoof comment has been taken down from the FCC website. perhaps Chester made a phone call. He seems to have enough power to get over 30 meetings with the FCC…..It goes without saying that he may well have used his influence to get the comment removed. It is just as well, the comment, while humorous served no real purpose. Notice that Chester is not disavowing any of the Sirius Buzz questions placed before him.

Position - Long Sirius/XM

In recent weeks there has been speculation as to what would happen with Scott Ferrall, who has been comfortably enjoying his 8 o’clock slot on Howard 101 for the last couple of years. Sirius announced today that the edgy sports commentator would be renewing his contract, and will remain on the Howard Stern channel.

“Scott Ferrall thunders through the world of sports at a hundred miles an hour every weeknight on SIRIUS, telling it like it is and letting his fans do the same,” said Scott Greenstein, SIRIUS’ President, Entertainment and Sports. “He remains the perfect fit for the Howard Stern channels.”

“I work for Howard Stern, ‘The King of all Media,’ and SIRIUS Satellite Radio,” said Scott Ferrall. “I couldn’t walk away from the revolution — it’s too much fun.”

On Saturday, April 26 Ferrall will host a special live broadcast from NFL Draft Fan Central outside Radio City Music Hall in midtown Manhattan. This one-time show will air from 3:00 - 4:00 pm ET on Howard 101 and will feature Ferrall in front of a live audience talking directly to fans in attendance as the 2008 NFL Draft kicks off.

It should also be noted that Ferrall is set to make his feature film debut in Redbelt, the mixed martial arts drama written and directed by David Mamet. In the movie Ferrall plays who else? Himself, an opinionated loud mouthed sports broadcaster. Redbelt premieres Friday, April 25 at the Tribeca Film Festival in New York City.

For those of you who still don’t know, the Scott Ferrall Show airs live Monday-Friday from 8:00 pm - 12:00 am ET on Howard 101.

Zoinks!!! Like we have a mystery on our hands, the representation is missing!!!

C3SR is a self proclaimed advocate group for satellite radio consumers. The organization formed shortly before the merger was announced, and received backing by the National Association of Broadcasters. C3SR has made many filings with FCC taking a position against the merger between Sirius and XM.

Setting all of that aside, an considering that the DOJ has already approved the merger, where is C3SR, a satellite radio advocacy group on certain issues that carry great importance to the group of people they claim to represent… namely, SUBSCRIBERS.

Primosphere is seeking half of the current SDARS spectrum. Such a move would make an entire set of current hardware (be it Sirius hardware or XM hardware) useless. One would think that a group claiming to advocate on behalf of subscribers would have an opinion on the loss consumers will face if all of that hardware becomes useless. C3SR, Where Are You? Why have you not taken a position on such a proposal? Why are you not advocating on behalf of existing subscribers?

Clear Channel is seeking that half of the spectrum be stripped away. C3SR, where are you?

Georgetown Partners is seeking 20% of the spectrum. Even at this reduced level, the services would likely have to offer less until full interoperable devices are available. This will still impact subscribers. C3SR, Where are you?

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With the report issued by CITI today, some confusion ensued as to what the report represented in terms of XM Satellite Radio. Some saw the report as a downgrade because the rating on XM is now a hold. The price targets for XM and SIRI in the report represent differing timeframes.

Specific to the merger, the $12.25 price target has been established in the near term and at the time of merger approval (which they believe is due soon and has a 70% chance). Once completed, the XM stock would be converted to Sirius shares. Thus the near term target for Sirius is $3 and XM is $12.25. Once the merger happens, the long term outlook happens. This is where an $8 to $10 target is arrived at for SIRI (as a merged company).

As stand alones, the longer range target for XM is $9 and for Sirius is $2.25. Obviously, the analyst believes that the merger makes the sector more attractive.

Position - Long Sirius, Long XM

Chester Davenport of Georgetown Partners has plenty of time to meet with the FCC, but it appears that he will not give shareholders the time of day. He has had over 30 meetings (the latest meeting) with the FCC in his quest to get 20% of satellite radio’s spectrum for an undisclosed “lease” amount, and an undisclosed business plan, but even after about a month of leaving messages, Chester will not return a call.

Why not let shareholders have more meat and potatoes on your plans Mr. Davenport? Is there something you are hiding? Is there an aspect of this that you do not people to know about? Is it that you hope to negotiate with the FCC and leave shareholders out of the equation altogether?

Mr. Davenport, you have my number. You can call any time. The questions on shareholders minds are not that difficult, so why not step up to the plate?

Perhaps it is because I have been critical of Georgetown Partners. I am critical because you are not providing detail. I have also been critical of U.S. Electronics. However, when their open access concerns were separated from the arbitration with Sirius, I produced a fair piece outlining what the U.S. Electronics position was. Heck, U.S. Electronics even used the piece in one of their filings with the FCC.

Mr. Davenport, if you want support, you need to tell us your positions. It is really quite simple.

Pick up the phone Chester.

Position - Long Sirius, Long XM

SiriusBuzz Radio will be airing once again tonight. The live show starts at 10:30 PM eastern and callers are welcomed. To participate simply call in at 347-945-7995. The show will carry a free form this week with discussions on retail, the FCC, merger concessions, and whatever you the reader/listener desire.

How do you get to SiriusBuzz Radio? It is as simple as going to blogtalkradio.com/sirius-buzz-radio

Join us tonight at 10:30 PM Eastern.

Position - Long Sirius, Long XM

Citi analyst Tony Wible assumed coverage of satellite radio, and has opened up with an $8 price target on Sirius Satellite Radio. The detailed report deals with the companies as a stand alone as well as with a merger. Wible sees a 70% chance of FCC approval on the merger.

The report is somewhat curious in the price targets for XM. News wires are picking this up as an XM downgrade, when in fact, the assumption of the merger passing would have a much higher target for XM given the conversion ratio of 4.6 shares of Sirius for each share of XM.

REPORT EXCERPTS

Fresh and Simple Reasons for Success

Assuming Coverage of the Satellite Radio Industry

Staying Strong – Satellite radio should continue to change the audio entertainment industry and gain share as its proves to be fresh (no need to create play lists or buy MP3s), original, cost effective, and a simple way to access premium/long tail content that can not be supported via radio or MP3 models. Given the highly fixed cost base of the companies, we view the sub growth as the key driver of the stocks and we see the industry having up to 55 mil subs by 2011 (+33.3% CAGR).

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After what happened last week with Artie Lange last week, fans are all wondering when it will happen again. The answer is THIS WEEKEND. The Artie Lange vs. Teddy saga will be replayed all weekend long on Howard Sterns Sirius channels. In addition, fans will get a dose of Stern Show reality via Howard TV, which will also air the show.

Stern fans can catch a glimpse of the video right here at Sirius Buzz (video below).

In the immediate aftermath of the Lange meltdown, Stern pulled the tapes, and fans were left speculating for a week while the show was on vacation. Stern said he pulled the tapes out of concern, and wanted to let cooler heads prevail. A week off seems to have done the trick. Artie is back, and it appears that all is forgiven.

Artie seems to be in better spirits, and is even taking the events with a bit of humbleness that show that he realizes the seriousness of what transpired. The fact that Artie is not running away from the events, or what transpired after discussion about his future on the show were being considered is a credit to Artie Lange. maybe there is hope for Artie yet. Credit Lange for having the courage to let these tapes air, because I do not think Stern would have aired them if Artie was sensitive to the issue.

So, If you missed the show when it first aired, you will now have your chance to not only hear it again, but see it as well. Fans can tune into the Stern channels on Sirius, or contact their cable operator about getting Howard TV.

Position - Long Sirius

Stifel analyst Kit Spring is the first analyst to make note of retail sales for SDARS being better than expected. As Sirius Buzz pointed out earlier today, the retail channel is showing improvement that is better than most analysts had been projecting. Additionally, Spring still sees merger synergies that approach the $5 Billion range. An interesting item to note is that Spring feels Sirius and XM overpaid for all talent except howard Stern, which they feel is a profitable deal.

REPORT EXCERPTS

Auto Weakness; but RetailImprovement; Still See Synergies

Kit Spring

1Q auto sales were weak, down about 10% for the Big 4 in 1Q. Though because penetration increased faster,both SIRI & XMSR should show growth in gross additions in 1Q. We are lowering 2008 subscriber estimates toaccount for expectations of continued weak auto sales. We believe investors have already focused on weak autosales.

1Q retail will be down, but looks substantially better than expected according to latest NPD data: Overall retailsales were -14% for the month, the third straight month of sequential improvement, for a 1Q total of -16%, much better than our expectation of -34% and -36% in 4Q.

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