Legal Issues

It is the issue that wont go away, and even after almost three years has not come to a resolution. Back when the merger was approved there were several stipulations attached. One stipulation related to Sirius XM giving up space for channels to be leased to “qualified entities” that would provide minority and educational programming.

Over the last couple of years there has been several proposals related to the channel leaseback requirement. Most recently American Independent Radio (AIR) filed a white paper with the FCC outlining a proposal that would have them being the qualified entity.

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When the FCC approved the merger between Sirius Satellite Radio and XM Satellite Radio their were several conditions attached. One of the conditions was that Sirius XM agreed to lease back channels to qualified entities to serve minority, educational, and under served markets. Over two years have passed, and to date no real action has taken place. The August 23rd extension is now upon us, so as expected the meetings with the FCC are beginning to happen again.

In an interesting FCC filing this week iClick2Media has offered up a white paper with some very interesting statistics and ideas for these new channels to become a reality. The association involved is called American Independent Radio (AIR). AIR has a goal of delivering specialized content over satellite radio, through Sirius XM’s Internet service, and to market it through social media. The filings are an interesting read, and the concept would seem to have some promise.

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Sirius XM Investors and subscribers are very familiar with royalties. The company has been paying royalties to the music industry for quite some time, and a little over a year ago began passing those costs onto consumers. Terrestrial radio on the other hand has been royalty free for decades. In essence, terrestrial radio got to play music for free because the airplay meant record sales. The audio entertainment sector has changed a lot since then, and there are now competing bills in Washington that center on the royalty issue.

Last week Bonneville President/CEO Bruce Reese, speaking at the Conclave in Minneapolis, seemed to split away from terrestrial radios long standing stance that the music they play be royalty free. Reese stated, “I’d love to cut a deal with MusicFirst, but it would have to be on the right terms…the odds are stacked against us long-term, because so many in Congress are sympathetic to the fairness claims of the music community”. Reese came to his conclusion more-so in an effort to gain certainty rather than on principle. He states that broadcasters and the NAB are having to go to great lengths to keep the Performance Rights Bill, H.R. 848, at bay, and ultimately the industry can’t keep going with uncertainty.

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That clapping you just heard was likely Howard Stern, one of the most heavily fined radio personalities in the history of broadcasting. These day’s Howard has little to worry about when it comes to FCC decency standards because he broadcasts his show uncensored on Sirius XM’s subscription based satellite radio. That was not always the case though. During his terrestrial radio days Howard had to suffer through engineers with censor buttons to beep out even the most innocuous references, god forbid they offend some lonely retired person with nothing better to do than report every time Howard uttered a questionable word.

The court has now spoken, and even though Howard no longer lives under those rules, he most certainly gave a victorious fist pump upon hearing that the FCC has taken one on the chin. Especially considering the manner in which it happened. Howard was always quick to point out that Oprah of Dr. Phil could say certain words without fear of punishment, but if he said them, even in the same context, the FCC would be all over him. It was a constant frustration for the King Of All Media.

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The National Association of Broadcasters filed comments yesterday with the FCC regarding media ownership reform. In their filing the NAB characterizes the proposed reforms as modest changes. What is at stake is the rule that currently bans or limits cross ownership between the newspaper-broadcast and radio-television cross-ownership rules. The NAB wants these rules eliminated. In addition the broadcasting lobby group seeks reform of the television duopoly rule.

Broadcasters “must have the flexibility to form competitively viable ownership structures,” today’s filing read. “Ownership rules that limit the ways broadcasters can compete in a digital, multichannel environment adversely affect stations’ abilities to serve their diverse audiences and local communities.”

Specifically the NAB noted that local broadcasters’ more prominent competitors “enjoy dual revenue streams of both subscriber fees and advertising revenues” and are not subject to local or national ownership restrictions. “Existing ownership restrictions are not needed to ensure programming, viewpoint, source or outlet diversity in the 21st century media marketplace,” the filing said.

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The FCC has extended once again the merger requirement that would have Sirius XM Radio make available for lease 4% of their spectrum for qualified entities to deliver minority and educational programming. The merger condition was agreed to by Sirius XM, but the issue has been exactly how to move forward. various organizations and companies have stepped forward with a desire to participate in the process.

The time-line of the extension is now August 23, 2010, and comments and action on the issue could happen earlier. With the WCS issue and now the spectrum issue on the side burner, Sirius XM can now focus on the issues of growing their business and getting more dollars to the bottom line.

Position – Long Sirius XM Radio

[via RadioInk]

The legal system in the United States is often considered the best in the world. However, sometimes things that go through the courts defy logic and can give even the most patient person a migraine headache. The latest in legal shenanigans involves East Texas, Apple, and Sirius XM Radio.

In a split decision a Federal Appeals Court denied the request by Apple and Sirius XM to have a patent trial moved to Massachusetts instead of the current location in East Texas. The basis for the appeal was that the plaintiff in the case was essentially accused of venue shopping because the company “moved to Texas just before filing their suit, has no employees in Texas, and their corporate office address is the same address as their patent attorney. East Texas has been viewed as being friendly to patent holders, and thus why many patent holders looking to sue will open an office there.

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The FCC is preparing to meet on May 20th to discuss and possibly set policy with regard to the WCS and SDARS spectrum. As SiriusBuzz reported earlier this week, Sirius XM released a video demonstrating the potential interference that WCS devices could case for satellite radio users. The video was compelling, in that rather than commissioners having to look at graphs and long calculations, they could simply see for themselves what the possible issues really boiled down to. The video must have been effective because WCS wasted little time in responding to the FCC.

In their response, WCS makes the classic mistake of making an assertion without already knowing the answer before doing so. WCS alleges, “Over the past several days, representatives of Sirius XM Radio Inc. (“Sirius XM”) have been providing Commissioners and Commission staff with access to a video that purports to demonstrate interference that Sirius XM subscribers will experience from the Wireless Communications Service (“WCS”) if the Commission adopts the staff-proposed rules reflected in the April 2, 2010 Public Notice in this proceeding.1 The fact that this video was prepared under the cloak of darkness, without giving the Commission or WCS community advance notice or an opportunity to participate, and then was distributed without any supporting documentation, speaks volumes about its legitimacy.”

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