Not that they needed to do anything more to prove how foolish they are, C3SR today filed a letter with the FCC that should remove all doubt. In their filing with the FCC, C3SR points to the recent subscriber announcement by Sirius as evidence that the merger should be denied. C3SR argues, " that the 38% growth in 2007, the gross subscriber number of 2.3 million, the churn being at the low end of guidance, and the fact that Sirius will be cash flow positive for the quarter are all reasons that should erase 'subliminal messages by merger proponents about the need for this merger'"
Here is why C3SR is looking more foolish today than they ever have:
1. Sirius and XM have not argued a failing business as a reason for the merger, as you point out. Thus, the cash flow does not really enter the equation. For what subliminal reason is C3SR bringing it up?
2. The continued growth of satellite radio is expected. It is also costly. While Q4 brings in positive cash flow, the other quarters do not. Sirius traditionally pays out chipset subsidies and produces radios in the third quarter to get them through the fourth quarter. This creates a situation where positive cash flow is obtained in Q4, and not other quarters.
3. For C3SR to rely on one quarter for their conclusion is laughable. I do not recall them coming out after Q1, Q2, and Q3 saying that the losses in those quarters point to a need for a merger.
4. Being profitable is the goal of any company.
5. Sirius came in within their guidance for churn in 2007. Wonderful. Companies set guidance because that is a number they feel they will obtain. They had 2.3 million net subscribers, and about 4.2 million gross additions. This means that nearly 1.9 million subscribers left the service during 2007. By example, if C3SR guided to do 1 post on their blog since March of 2007 they would have met their guidance. Wait, they did just that! Not a single update since March from an organization that is claims to represent satellite radio subscribers.
6. Yes Karmazin stated that this represents the highest growth rate in satellite radio history. It was derived primarily from the OEM channel. OEM subscribers receive the service for a specified period of time at no fee to the subscriber (in most cases the OEM picks up the initial subscription). Upon completion of this period, half of the subscribers stay, and half leave.
C3SR also asserts that if the merger is approved that consumers will be forced to accept programming and pricing dictated by Sirius and XM. Correct me if I am wrong, but isn't a listener of terrestrial radio forced to listen to the programming and advertising dictated by the terrestrial radio stations, many of whom are NAB members, and as we are aware, the NAB is a financial supporter of C3SR? Will the prices be dictated by Sirius and XM? They are competing with ad based terrestrial radio. Half of those that get the service in their car cancel. Those people that cancel find that terrestrial radio or an iPod is an adequate substitute for satellite. The cost of a subscription is obviously not right for anyone. How much could these companies realistically charge and not see a consequence? Be realistic. Additionally, Sirius and XM have committed to a-la-carte as well as other more basic subscription offerings as a concession. Additionally, the FCC could mandate a price structure for a specified period of time.
C3SR, simply stated you guys look like fools. You start an organization that claims to advocate on behalf of satellite radio subscribers. You accept finances from the National Association of Broadcasters, you do not update your website for months, and can't even find the energy to even poll satellite radio subscribers for their opinion. An advocate is someone who acts on behalf of the wishes of a group. C3SR has provided no documentation whatsoever that you even understand the desires of satellite radio subscribers.
The record is clear. More subscribers want the merger. If you want to advocate on behalf of subscribers I would suggest that you first understand their feelings. Someone who claims to be an advocate on behalf of a group that does not want them as an advocate is being an ass.
Position - Long Sirius, XM