Ibiquity Seeks Inclusion – Georgetown Partners Seeks Handout
In a filing with the FCC, Ibiquity, the company behind HD Radio, is seeking inclusion into all satellite radio receivers should a merger be granted. Ibiquity still takes no official stance on the merger, but does call the merger a monopoly. Ibiquity feels that satellite radio has entered into exclusive subsidized arrangements with automobile manufacturers that could preclude HD radio from gaining a foothold in the industry.
Interestingly, though full details of many OEM agreements are not public, there has never been any indication that the “exclusive arrangements” have ever been exclusive to anything but satellite radio products. Indeed, HD radio already has deals in place with BMW as well as Ford.
In my opinion, Sirius and XM should not be penalized for coming to arrangements with auto manufacturers, nor for subsidizing the installation of receivers. Both Sirius and XM have invested large sums of upfront money to pave the way for their services to get into the dashboards of automobiles, and beyond that have given many OEM’s a share of revenue.
For these reasons a requirement to include HD radio into satellite radio receivers would be tantamount to letting another business model avoid the heavy costs that have been born onto the shoulders of stockholders in Sirius and XM. There is no free ride these days. Is Ibiquity planning to pay any subsidy? Are they willing to share revenue with OEM’s, or even Sirius and XM?
For Sirius and XM to get where they are today was a process that Ibiquity wants a short-cut on. To provide that shortcut without remuneration seems unrealistic. Why should shareholders of Sirius and XM be required to bear the burden that Ibiquity themselves seems unwilling to bear?
In a second filing, Chester Davenports Georgetown Partners is seeking a sweetheart deal of a requirement for Sirius and XM to lease 20% of their channel capacity for this “diverse” company to operate and run. Once again, why should current investors be asked to sacrifice 20% of their capabilities and infrastructure to Georgetown Partners? Further, why is Georgetown Partners negotiating with the FCC rather than Sirius and XM? Is is right that a broad statement such as a requirement of 20% of the bandwidth be proffered to the government instead of the Boards of Sirius and XM? The Boards have a fiduciary responsibility to the shareholders, the FCC has no such tie. Why has Georgetown Partners not identified the dollar figure which they are proposing? Why have they not demonstrated programming concepts to fill 40 channels of programming?
Filings such as these grow tiresome quickly. Since when does a proposed merger mean that the FCC is now in charge of a welfare program? Quid Pro Quo happens in Washington. Handouts do as well. Just because it happens does not make it right. Shareholders of Sirius and XM have endured years of these companies growing pains. They have endured recapitalization, dilution of shares, and an onslaught of competition such as iPods and cell carriers offering content that was not imagined when the services launched. Asking shareholders to give 20% away to Chester Davenport, and to include HD Radio into all receivers without real remuneration is simply asking too much.
Position – Long Sirius, XM
>> I have not bothered to separate out Sirius subscribers vs. XM subscribers
Fair enough. So, you do not know. I can accept that. If you haven’t tabulated, all you had to do was to say so.
>> By example, Sirius’ self pay churn is at 1.6%. XM’s self pay churn is at 1.8%. Which subscriber would you conclude is more happy with their service?
Actually, Sirius claimed 1.6% for the “full year” versus 1.69% (XM, MRQ). Until Sirius discloses how they computed the 1.6% figure, a direct comparison is not appropriate.
(To appropriately compare XM’s & SIRI’s subscriber #s it is necessary to reduce SIRI’s total by well more than a million subscribers. It is reasonable to expect that SIRI also fudges the churn figure by at least 0.09%.)
1. I Do know. The sentiment of XM subscribers and Sirius subscribers regarding the merger is not materially different. The comments bear this out in an obvious fashion.
2. Self paying churn is defined as the number of self paying subscribers that churn out. the point I am making, which seems to go over your head is that the churn data illustrates that the companies subscribers seem to have similar sentiments towards subscribership. Your assertion that XM subscribers “are happy with the service they have and therefor do not want the merger” and Sirius subscribers, “want the merger because they are clammoring for XM content” is off base by a country mile. I think you know this already though.
>>> Self paying churn is defined as the number of self paying subscribers that churn out.
No, it is not. In XM’s case, monthly self-paying churn is defined as the number of self-paying deactivations divided by the weighted-average subscriber counts for the period. We do not know how Sirius defines it at this point; perhaps their 10K will provide some detail. Even a nuance such as using a straight average of subscriber #s over the year versus a weighted average, or monthly average, can have a substantial effect on the churn calculation — certainly more than the .09 difference we’re talking about. We just have to wait and see how they chose to calculate that metric. One thing is pretty likely — they will have chosen the method that makes it look best for them regardless of whether it makes sense to compute it that way (just as they’ve done with their subscriber counts).
At this point, SIRI’s s/p churn figure is just too nebulous to attach any meaning to it.
>>> I Do know. The sentiment of XM subscribers and Sirius subscribers regarding the merger is not materially different.
Perhaps you THINK you know, or perhaps you WANT it to be a certain way — but without numbers to back it up, you saying you know really doesn’t mean much.
I’ve been reading your posts for years now, and you consistently try to make Sirius look better than it is in real life, and you also have a persistent pro-merger bias that makes its way into every merger-related post you make. And it is certainly your prerogative to do so. But what it means is that without hard numbers, readers must assume that any remarks you make have a pro-Sirius bias.
If you haven’t tabulated the actual comments by who has an XM-preference versus who has a Sirius-preference, I just don’t believe it is possible to know what their respective feelings are about it.
If you want to claim that a certain % of the respondents support the merger, as you’ve done, I can’t argue with that — you DID tabulate that information. But without an honest breakdown between SIRI-preference and XM-preference, I don’t see how you can present anything meaningful other than to say, “I’m guessing they view it about the same, but I have no data to back it up”. You get that, right?
Frontmed…
1. Sirius has been disclosing self paying churn as well as fully loaded churn for quite some time. The two metrics differ by the OEM subscribers that are getting subscriptions paid for by an OEM manufacturer. You could make a simple phone call to verify this.
2. The point at hand was your assertion that XM subscribers are anti merger and Sirius subscribers are pro merger. The churn data, regardless, illustrates that the satisfaction of subscribers is very similar. Thus, it is one method by which to prove that your point is not a factual assertion.
3. In the process of reading all of the comments, and assigning a pro merger or anti merger stance to them, I get a very good idea of how consumers who choose to identify the service they have feel. In that experience, there is simply not a material difference in those opinions.
4. What I WANT matters very little. I have always been of the opinion that the exclusive OEM contracts are not the way to go. I have always felt that letting the consumer choose the service they want is the way it should be.
Since you do not want to do the homework, I looked at the most recent 100 consumer comments:
59 expressed support for the merger but did not identify a satellite radio service
13 expressed support for the merger and identified themselves as Sirius subscribers.
10 expressed support for the merger and identified themselves as XM subscribers
11 expressed support for the merger and identified themselves as subscribers to both services
1 was unsure about the merger and expressed that they were a Sirius subscriber
1 stated they were against the merger and that they are an XM subscriber
5 expressed that they were against the merger but specified no satellite radio company.
As I stated, the sentiment is quite clear and overwhelming. There is no real material diff. between those that identify themselves as XM subscribers and those that identify themselves as Sirius subscribers.
93% favor the merger
6% are against it
1% unsure
The general public is vastly in favor of the merger.
There will be plenty of people who will no longer have to decide between both services and get neither.
Frontmed is in a small minority who dont want both services under the same umbrella.
>>>> The general public is vastly in favor of the merger.
Do you have ANY evidence, whatsoever, to back this statement up? I have seen NOTHING that would even REMOTELY suggest the “general public” is vastly in favor of the merger.
Not that it matters. The general public VASTLY misunderstands what the merger does and does not mean for them. From reading posts by the “general public” on non-sat radio related message boards, I can tell yo that the “general public” actually believes that a merger means they’ll wake up one day and be able to get both services’ content on a single receiver. Not happening. Many actually believe they’ll also get this at the same price the currently pay for ONE service. Not happening. Many believe they will get “more diverse” content. Not happening (and in fact, the content will be LESS diverse post-merger).
The point is, I don’t know (and you don’t, either) how the general public feels about the merger — but I *DO* know they don’t comprehend what the merger means and doesn’t mean to them. Part of the sales job by XM’s & SIRI’s management has been to obscure the downside of the merger, and they have done a great job at it. Even close followers of the industry like you and Tyler don’t fully comprehend what the merger does and doesn’t mean. How can the general public be expected to?
Frontmed is a extremist, and it is pointless to argue with him. He has already eluded that if the DOJ and FCC approve the merger they would be wrong to have done so. But I think they have a little more expertice at the DOJ then he has in antitrust matters. Maybe he thinks they have been bought by Mel K. or they are not looking out for the publics welfare. He might think that they dont want to be slapped in the face by another federal judge telling them they have got to widen their preception of what the market is, like in the whole foods merger. But it has nothing to do with antitrust matters or the publics welfare, they would just plain be wrong too do so As a side note Mel just stated that an increase that was suppose to happen latter this year, (if the merger was denied) is not going to happen reason he gave (in a nut shell) was he was more interested in gaining subs. and was afraid of what it would do to the churn rate. Now Frontmed dont respond to this because I already know you think Mel to be the antichrist and cant trust anything he says.