Cohen sees the OEM channel as a growth story for SDARS and states in her report, “satellite radio is well on its way to becoming standard in new auto production.” She projects that installations will climb to 50% in calendar 2008 and to 85% by 2013, thereby yielding double digit growth despite plummeting OEM sales. Cohen notes that while sales of cars will be down in the neighborhood of 14% in the next couple of years, that a 66% growth in installations will still be a NET positive for SDARS.

Cohen maintains a BUY rating on Sirius and is raising the P.O. to $4.50 from $2.70.

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Tyler Savery Position - Long Sirius, XM

– adopt comprehensive compliance plans, and take steps to address any potentially non-compliant radios remaining in the hands of consumers. This could be a positive for me and a couple of my old radios which may be getting an upgrade!

– Xm will have 60 days to shut down 50 repeaters and shut down or bring into compliance an additional 50 and Sirius must bring into compliance or shut down up to 11 variant terrestrial repeaters that were already shut down in 2006 by Sirius.

Sirius and Xm will also be required to make a voluntary contribution to the United States Treasury of approximately $17 million in the case of XM, and approximately $2 million in the case of SIRIUS. (You gotta LOVE those voluntary requirements!)

This resolution is widely believed to be the final hurdle before the FCC grants the license transfer application of Sirius and Xm.  

Full press release

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Wharton stated:

“This sweetheart deal for Wall Street speculators is premised on a promise that a monopoly will provide consumers with lower prices, better service and more programming formats. Only members of the Flat Earth Society would buy into such specious nonsense.”

A sweetheart deal for Wall Street speculators? Perhaps Wharton was holding the stock chart for these equities upside down. Thanks in part to the NAB delay tactics, this merger has dragged on and on, and investors have actually suffered. Do members of the Flat Earth Society believe that 20 minutes of commercials per hour is good? Is it true that only members of the Flat Earth Society can be members of C3SR? What was their membership again? Oh, they (or you) never did tell us that.

“Just six years ago, the FCC denied a monopoly to the nation’s only two satellite TV companies in a 5-0 vote. Yet today, the Commission is apparently preparing to grant a monopoly to the nation’s only two satellite radio companies that in their 11 years of existence have had more luck flaunting the FCC’s own rules than creating a successful business model.”

If the business model was such a failure, or is going to be such a failure, why did the NAB spend millions to campaign against the merger? If SDARS is such a failure, why did the NAB seek inclusion of AM. FM, and HD capabilities in all SDARS receivers? You seem quite worried about something you think is such a failure. Perhaps it is time that the terrestrial members of the NAB looked at their own business models going forward. If we want to discuss flaunting of FCC rules, lets take a look at payola.

“Historians will view this satellite radio giveaway as an irrational departure from 118 years of antitrust law wisely founded on the unassailable reality that competition serves consumers better than monopolies. NAB thanks Commissioners Copps and Adelstein — along with consumer groups, 80 bipartisan members of Congress, and scores of labor, minority and antitrust organizations — who stood against this wrongheaded monopoly. Given such overwhelming opposition, we’re not convinced the final chapter of this book has been written.”

News Flash… historians will understand that the audio entertainment landscape is very diverse. terrestrial radio, MP3’s, cell phones capable of delivering content, Internet radio. The NAB thanks many people in this last quote. That thanks in part comes from campaign contributions, but it is kind of Wharton to put it into words as well. The NAB speaks of overwhelming opposition. What about the overwhelming support for the merger. Even with the ill fated Internet campaign which Sirius Buzz helped expose, the vast majority of comments were for the merger.

The NAB is not convinced that the last chapter has been written? Perhaps they will appeal the merger in a futile attempt. Personally I would suggest that they focus on educating their members as to the future, or better still where the present of audio entertainment is, and maybe even update their website. Those 2007 legislative priorities on the main page are going on 8 months overdue… it is 2008 after all. Perhaps this is a good task for David Rehr. The NAB Radio Show is less than two months away. I would assume the members of the NAB will want to know the legislative priorities.

Should the NAB decide to challenge the decision, or even back any other group that decides to do so, it will be seen by history as a group that wanted so desperately wanted to maintain audio entertainment is yesteryear status that they traded any credibility for what is already known to be a futile attempt to reverse a decision that regulators considered over a period of about 18 months. I have a suggestion. Save your dollars for a cause you have a chance of winning. Spend your money fighting royalties. Spite will get this organization nowhere.

Position: Long Sirius, XM.

In a joint letter to Chairman Martin, they state in their letter:

“We are encouraged that XM and Sirius have offered to help improve the state of minority ownership and control of media outlets. While we recognize that this proposal is not true ownership of a media outlet, it is certainly a step in the right direction. Should the merger occur, we fully support this voluntary offer.”

[ Reps Letter ]

“I was hoping to forge a bipartisan solution that would offer consumers more diversity in programming, better price protection, expanded choices among innovative devices and real competition with digital radio,” Adelstein wrote. “Instead, it appears they’re going to get a monopoly with window dressing. We really missed a great opportunity to reach a bipartisan agreement that would have benefited the American people.”"

This news wasn’t out 5 minutes when news leaked that Martin was close to getting Commissioner Tate to vote in favor of the merger. Throw bipartisanship out the window! From there a press release was issued seemingly every minute as the day progressed. It is for that reason that I wanted to revisit this.

Now that we know how the vote will turn out, what about the concessions? Adelstein’s statement leads me to believe that the 25% spectrum divestiture is now off the table. If this is true, it looks as though Georgetown will have failed in their hijacking attempt. It also gives the impression that Commissioner Tate has opted for open access which Sirius and Xm have offered, instead of the communistic hybrid digital chip mandate. Ibiquity will actually have to hire salespeople to promote their unwanted product.

The WSJ reports that Sirius will pay a fine and only lists “minor” concessions added. My guess is that the main concessions she is adding will be regarding oversight of the proposed concessions and possibly a few extra channels.

Position: Long Sirius, XM.

Wienkes has been a satellite radio bear for quite some time. About a month ago he took the price targets on Sirius an XM substantially. At that time the reaction was instant and dramatic. Sirius and XM, hampered by the lack of a decision on the merger, caved on the news.

Oh how the mighty have fallen. Perhaps it was a $5 price target on XM that the street simply viewed as going way over the edge, or perhaps it was that more recently there had been measurable activity on the merger. Either way, the words of Mr. Wienkes seem to no longer shine the way they did a month ago.

The merger news and the FCC seeming to arrive at the conclusion without additional delays seems to have arrested the opinion of Wienkes. Will we see yet another report tomorrow? Only time will tell.

“The agency is expected to approve the merger and a decision could come as early as today on the XM-Sirius merger, according to an official at the FCC. The source, who spoke on the condition of anonymity because merger review is ongoing, said Chairman Martin is preparing to fine the satellite radio operators for failing to abide by rules to offer interoperable radios for their technologies. That enforcement action has been a condition pushed by Tate. “

[ Via Washing Post ]

Should this news be accurate, the satellite radio companies now have the green light to move forward with their merger.

Once the deal is consummated, each share of XM will receive 4.6 shares of Sirius.

Position: Long Sirius, XM.

[ Via Wall Street Journal]

Thus we wait on commissioner Tate, and a number of headlines, some of which are Howard Stern type material, come to mind.

• “Tate Is Late, Sirius and XM Expecting”
• “Tate Plays Hard To Get”
• “Tate Will Be Casually Late For The Event”
• “Can’t Consummate Without Tate”

The list could go on and on, but the bottom line is that commissioner Tate is holding all of the cards. In the minds of many, the outcome is already known, it is just a matter of how much Tate grows the pot in the process. Most think that Tate will not be too greedy, but only time will tell.

The positive in recent events, is that once Tate votes, the process is complete. People are now betting on the mindset of Tate, and her decision could come at any time.

Position: Long Sirius, XM.