Public Knowledge Asked About Georgetown Partners By FCC
In a development that raises concern in my mind, the FCC inquired to Gigi Sohn of Public Knowledge (Public Knowledge FCC Filing), whether Public Knowledge was in support of the Georgetown Partners proposal where Georgetown would basically get a 20% stake in satellite radio.
The fact that the FCC is asking this question is very disturbing to me as a shareholder and as a consumer.
Gigi Sohn met with Kevin Martin’s Senior Legal Advisor Michelle Carey. In the meeting Ms. Carey inquired as to whether Public Knowledge would support such a proposal. Sohn replied that the 5% set aside proposal outlined by Public Knowledge was likely to meet the desired goal. She stated that she agreed with the aspect that such programming was content that Sirius or XM would not have editorial control over. Also discussed was the failed Echostar and Direct TV merger of 2002.
Georgetown Partners has been very active in approaching the FCC. It seems that on a weekly basis they are meeting with someone at the agency trying to further their agenda. They have enlisted the likes of Jesse Jackson to support their stances. Many people have tended to dismiss the Georgetown Partners proposals as something that is simply asking too much. I have been critical that Georgetown is using the FCC to forward an agenda without outlining anything concrete for consideration. By using the FCC as the negotiating platform they are effectively trying to get regulators to mandate that Sirius and XM cut a deal with them. If that happens, shareholders will come up on the short end of the stick.
Shareholders and consumers who are concerned about this happening should voice their opinion to the FCC. At this point Commissioner Copps has quoted Georgetown Partners, and now Chairman Martin’s Senior Legal Advisor has as well. In my opinion, the proposal, as currently constituted, brought up by Georgetown Partners is a deal breaker. The fact that it is getting the regulators attention as much as it is is troubling.
Position – Long Sirius, Long XM
Well, at least they are “talking-about-concessions”, and that pre-supposes a merger; This merger will have to have concessions, b/c of the nature of the merger itself; I think the cocessions can be dealt with, and that the synergistic value will not be lost, diminished maybe, but not lost; Also, there are new dynamics that can take place with a merged Co., that haven’t even been mentioned; Just get the merger done…and I’ll be happy…even if it is with “carrot-and-stick” overtures!
Thomas….
There could be a silver lining here in that the question would not be the sort of question asked if the merger were going to be denied.
Where I am troubled is that Georgetown Partners proposal is getting taken seriously at all.
Georgetown is seeking 20% of the spectrum and access to all of the customer support, marketing, research and development, OEM deals, and everything else. They are not seeking to offer a subscription service, but rather a commercial based service with roughly 60 channels full of programming. Simply stated they are asking for a full blown ready to start business.
I am also troubled that they are negotiating with the FCC instead of Sirius and XM.
Assume that the FCC says the merger is fine, but you have to give up 10% of the spectrum and all that goes with it to a minority owned enterprise. Georgetown says they will take that for $50 million a year. Sirius and XM want $150 Million. What happens? Georgetown goes to the FCC and states that the companies wont talk turkey. The FCC puts the hammer down, and shareholders get screwed.
The public Knowledge proposals I can live with. The Georgetown proposal (at this point) is like extortion. 20% of the company for an unamed lease price is a deal breaker to me.
Tyler, would that not have to be put up for bid. For instance if Georgetown says will give 50 million but another company says they are willing to give 100 million. Not that I like that prospect ether. But I am sure Mel and Gary or pretty good negotiators. Hell if you believe FrontMed Mel should be able to hoodwink them too.
Tyler, forgive me if I got this wrong because I did not read the whole filing just your exerts. But it sounds to me like she was saying the 5% was to their satisfaction. I did not see were she had recommended or indorsed Georgetowns perposal.
Would the fcc be going through this $#$#$ if the meger was gonna get hexed?
kevin: That is exactly the point. There is no way they would be doing this if it was going to be killed.
I loath Georgetown Partners. They are cowards who use their race and their contacts to their advantage and abuse the system to get what they want without having to go through hoops like everyone else. To hell with them. If the Public Knowledge recommendation gets any support at the FCC, Georgetown will only be able to have one channel anyways.
Public Knowledge is one of the few well written and well considered proposals I have seen throughout this government sponsored circus that we call the FCC. I like all of their proposals actually, including the open network proposal so that other companies can come in and develop radios for retail sale. The 5% set-aside they are talking about is nearly 20 channels of non-commercial programming. That is a significant number of channels, but it pales in comparison to Georgetown Partner’s 80 channel request. And if I am reading it correctly, under the Public Knowledge recommendation, it is still a “lease” of the bandwith, which means that the merged company will still be getting paid for it.
Newman, thanks for the response. It sounds like the Georgetown deal would be a lease aggrement as well. 80 channels is a ridiculous amount! Has Sirius Xm been meeting w/ FCC or DOJ in recent weeks? If so, it’s another good sign and hopefully Mel can give some sort of update to shareholders this week. This is most frustrating at this point!!! Tyler what’s your 1 and 2 yr. price targets on the combined company? What are your %’s of a merger at this point? Sorry for all the questions. Thanks
Kevin….
1. I would say that Sirius and XM are meeting with regulators on a regular basis.
2. I would not look for much in the way of an update from Mel. I look for him to maintain his confidence, but not do anything to upset the apple cart.
3. I try to avoid putting targets on these equities. I will say that I believe in satellite radio. I believe that these companies have the potential to be media machines. Getting to that point has been a challenge, but if they get there I think you will see a very healthy SDARS future.
4. I put merger odds of passage at at least 70%. If it was a slam dunk block like the 30% crowd thought, it would have been blocked already. While the waiting game is frustrating, it means that considerations are being made. The dialogue between Martins senior legal advisor and Gigi Sohn is interesting.
Tyler runs the Stock Talk here, so he is very professional and tries to stay as impartial as possible.
I, on the otherhand, do not. =)
As far as the merger goes, I see the liklihood of a merger at around the same 70-75% that Tyler does. The only reason that I see the merger failing is due to excessive concessions.
Stock Price: I see Sirius jumping to $5 on the merger news, maybe a spike as high as $5.50 or $6 initially, but then settling back down to around $4, perhaps a tad lower once it is all said and done.
XM, I see spiking to $24-$26 on the merger announcment until the merger is consumated and XM will no longer trade.
1 year outlook: $4
2 year outlook: $6
It all depends on how quickly synergies are realized and how the combined financials work themselves out. Neither company has beautiful financials, and this merger is only going to cloud those financials further. Once the financials get clearer on how the two companies are going to opperate combined, then you will see the stock prices appreciate rapidly.
3 year outlook: $10+ if financials clear up.
Please keep in mind: This information is not ADVICE, it is simply some sick speculation provided by someone who cant even balance his own checkbook, so take it for what you will.
Hey Newman, LOL, that was great.