We are only days away from seeing one of the most anticipated and important documents in the merger process. July 24th brings the close of the reply period in the FCC merger review, and it is by this date that we will see Sirius and XM file their replies to comments made during the initial stage of the FCC process.
WHAT TO EXPECT
1. Expect a detailed rebuttal to the positions outlined by the NAB and their consultants. Interestingly, the NAB laid out it’s entire argument shortly after the FCC began seeking comments. Since that time, subsequent NAB filings have been more of the same, as they appear to have contracted a few analysts and firms to make virtually identical arguments. Sirius and XM can outline very detailed and specific arguments to all points raised by the NAB. Ironically, some statements made by the NAB open a wide chasm of opportunity for Sirius and XM to respond to. Some “general” statements by the NAB such as “the merger is anti-consumer” can get very detailed responses that can be pages in length.
2. Expect Sirius to outline the competitive landscape from various perspectives including consumer behavior, advertising, the use of multiple platforms to deliver content, etc. By example, the “local” argument set forth by the NAB will be a topic of discussion. NAB membership websites and internet streaming will be a topic of discussion.
3. Look for the report to deal with and argue that the competitive landscape that exists ALREADY today is sufficient to demonstrate competition, and then hammer the point home further by outlining emerging technologies that will be commonplace just two years down the road.
4. Look for Sirius and XM to point out the substitutionality that exists in the marketplace. This can be demonstrated not only by various surveys, but also by looking at things such as churn and OEM “take rates”. Most who leave satellite radio do not switch to the other service, but rather find substitutable sources for audio entertainment. Additionally, and unlike the NAB, Sirius and XM have a wealth of statistical data relating to their churn, as well as their subscribers. They can tell you where these people are from, how long they were subscribers, and what type of radio they had. Sirius and XM could be very specific about such data if they decide to be.
5. Look for greater detail on how this merger will benefit the consumer. This subject will outline potential pricing structure, as well as outline synergies. This is where the “concessions” will be outlined. The demonstration of synergies will be a very major component in this filing. Synergies are important because they help demonstrate how consumer benefits can be arrived at, and that there is a specific reason why this merger makes financial sense.
6. Look for more detail on pricing plans that can be anticipated in the merger process. Sirius and XM will likely outline their base pricing plan, the standard price, as well as proposed pricing for premium service (where you get channels from the other carrier).
These are some of many points that Sirius and XM will likely outline. Readers of the filing should be prepared for some heavy reading, as this filing is likely to not only outline Sirius and XM’s case for the merger, but will also offer several rebuttals in the process. Additionally, readers should not anticipate being able to access all details of the filing. In outlining their case, Sirius and XM are very likely to divulge information to the FCC that is not public knowledge, and because of the confidentiality filing, will be protected.
Mel Karmazin will be speaking at the Press Club this Monday. It is possible that the filing will be filed on that date, but technically they have until July 24th to file it. No matter when it is filed, check back here for more information.
Position - Long Sirius, Long XM -IMOJB-