Sirius Buzz Moderator Newman penned a great letter to the FCC that I as well as another concerned shareholder wanted to elaborate on. The letter from Newman was first published in the Sirius Buzz Forums and the additionally published by the FCC on their website toady. Newman was responding to an article here on Sirius Buzz, Lawmaker Clarifies Merger Support, in which congressman Rush clarified his position on minority ownership in SDARS.

One item that I pointed out in the original article is that both satellite radio companies are publicly traded. This allows anyone who desires to participate in the ownership satellite radio. In fact, anyone could own as large a stake as they wanted, and could also own enough shares to gain membership on the Board of Directors.

The Newman letter:

To Whom It May Concern:

There has been a lot of talk lately regarding Minority Ownership in conjunction with the Sirius Satellite Radio and XM Radio (“The Companies”) merger. Not surprisingly, the large majority of this discussion is coming from African American Congressmen and businessmen.

My question to you is “Why?” The Companies currently have one of, if not the most, diverse programming lineups available to be heard on one service (if the merger is approved). It would be difficult to find anything comparable, even if you include cable and/or satellite TV. All you have to do is pick what you want to listen to, and you have it.

African American Programming

  • Sirius Channel 106 – The Foxxhole – Comedy and more presented by Jamie Foxx
  • Sirius Channel 43 – Backspin – Old Skool Rap
  • Sirius Channel 71 – Jazz Café – Smooth Jazz
  • Sirius Channel 72 – Pure Jazz – Classic Jazz
  • Sirius Channel 73 – Spa 73 – New Age Jazz
  • Sirius Channel 74 – SIRIUS Blues – Jazz/Blues
  • XM Channel 70 – Real Jazz – Traditional Jazz
  • XM Channel 71 – Watercolors – Contemporary/Smooth Jazz
  • XM Channel 72 – Beyond Jazz – Modern Jazz
  • XM Channel 73 – High Standards – American Standards
  • XM Channel 74 – Bluesville – Blues
  • XM Channel 101 – The Joint – Reggae
  • XM Channel 169 – The Power – African American Talk

Hispanic/Latino Programming

  • Sirius Channel 90 – Universo Latino – Latin Pop Mix
  • Sirius Channel 92 – Bumbon – Reggaeton/Tropical
  • Sirius Channel 181 – ESPN Deportes – Spanish broadcast of ESPN
  • Sirius Channel 182 – CNN En Espanol – CNN in Spanish
  • XM Channel 91 – Viva – Latin Pop Hits
  • XM Channel 92 – Aquila – Regional Mexican
  • XM Channel 93 – Caricia – Spanish Oldies
  • XM Channel 94 – Caliente – Tropical
  • XM Channel 102 – Sur La Route – Spanish Pop Hits
  • XM Channel 126 – CNN en Espanol – CNN in Spanish
  • XM Channel 147 – XM Deportivo – Spanish Sports Talk

Other Nationality Programming

  • Sirius Channel 11 – BBC Radio 1 – New Music from the U.K.
  • Sirius Channel 93 – Bande a part – New French-language Music
  • Sirius Channel 94 – CBC Radio 3 – Canadian Indie Music
  • Sirius Channel 95 – Iceberg Radio – Canadian Adult Alternative Music
  • Sirius Channel 138 – Premiere Plus – Canadian Current Affairs
  • Sirius Channel183 – The Korean Channel – Korean Language Radio
  • Sirius Channel 185 – Canadian Weather Network – Canadian Weather
  • Sirius Channel 187 – Sports Extra – Sports radio French Language
  • Sirius Channel 188 – RCI Plus – International Talk French Language
  • XM Channel 131 – BBC World Service
  • XM Channel 159 – ATN – Asian Radio
  • XM Channel 244 – Canada 360 – News and Information
  • XM Channel 245 – Quoi de Neuf – News and Information

Religious Programming

  • Sirius Channel 66 – The Spirit – Christian music
  • Sirius Channel 67 – Praise – Gospel Music
  • Sirius Channel 159 – The Catholic Channel
  • Sirius Channel 160 – EWTN Global Catholic Network
  • Sirius Channel 161 – FamilyNet Radio – Christian Talk
  • XM Channel 32 – The Message – Christian Pop and Rock
  • XM Channel 33 – Spirit – Gospel
  • XM Channel 34 – enlighten – Southern Gospel
  • XM Channel 170 – Family Talk – Christian Talk

Political Programming

  • Sirius Channel 144 – SIRIUS Patriot – Conservative values
  • Sirius Channel 146 – SIRIUS Left – Liberal talk
  • XM Channel 130 – POTUS ’08 – Unbiased Presidential Campaign Coverage
  • XM Channel 166 – America Right – Conservative Talk
  • XM Channel 167 – Progressive Talk

In addition to regularly scheduled programming, The Companies both have regular specials dedicated to diversity. Simply looking at recent press releases will show you this.

Sirius & XM Press Releases

  • SIRIUS Satellite Radio Signs Mark Thompson, Trailblazing African-American Political
  • Talk Host and Human Rights Leader to host a daily 3-hour show.
  • SIRIUS Satellite Radio To Honor Black Music Month With Dedicated Programming
  • SIRIUS Satellite Radio To broadcast Iowa Brown and Black Presidential Forum Live
  • SIRIUS Satellite Radio To Observe martin Luther King, Jr. Day with Special talk and Music Programming
  • SIRIUS Satellite Radio Celebrates Black History Month
  • Talk Radio Star Joe Madison “The Black Eagle” Joins XM Satellite Radio
  • XM’s ‘The Power,’ The Only National African-American Talk Radio Channel, Expands Lineup With New Shows
  • 39th Annual Dove Awards To Broadcast Live On XM April 23
  • XM Satellite Radio’s Presidential Election Channel ‘POTUS ‘08’ To Broadcast
  • Nationwide From Philadelphia’s Landmark Restaurant Pat’s King Of Steaks on Pennsylvania Primary Day April 22
  • XM Radio Joins With EWTN Global Catholic Network to Launch ‘Papal U.S. Visit ‘08’ Channel On XM
  • XM Celebrates Black History Month With Original Programming and Specials Featuring Gamble & Huff, Aaron Neville, Natalie Cole, and Many Others

Above, I have listed 51 separate channels that The Companies have dedicated to broadcasting diverse content which include music, news, sports, and talk. This is 51 channels out of a combined 300, which represents nearly 20% of their available spectrum. In addition to that, I have pointed out 11 separate press releases that have been released since the beginning of 2008 that signify the diversity of programming that The Companies have sought. Recently, however, there are several people and groups that apparently feel that this is not sufficient.

On May 5th, news was released that two prominent Congressmen wrote a letter to FCC Commissioner Kevin Martin praising The Companies for pledging to lease eight channels to minority owners. These two Congressmen were identified as Congressman Towns (D-NY) and Congressman Rush (D-IL). Today, however, Congressman Rush retracted part of that statement, stating :

“I wish to disassociate myself from a letter to [Martin], dates May 5, 2008 and signed by Congressman Towns and me, which I stated that I fully supported ‘XM’s and Sirius’ voluntary commitments, [that] the combined company will agree to provide under long-term leases eight channels on the combined system (four on each system) to minority owners. While I certainly believe it’s important to dedicate channels for minority ownership, I do not believe a mere eight channels out of 300 total in the combined entity represents an ‘important and realistic effort to address the dearth of minority ownership’. In reality, I firmly believe that XM and Sirius can designate far more channels than eight for minority ownership.”

I am curious if Congressman Rush has ever listened to satellite radio and knows what all it offers. It would appear as if he had, because he goes on to say:

“the merger will create new opportunities for diverse programming that has been overlooked by terrestrial-radio broadcasters.”

Congressman Rush is absolutely correct. The merger will create new opportunities for diversity. In fact, a large number of independent groups have come out in favor of this merger because The Companies have promoted diversity. Which groups?

  • NAACP
  • Second District of the African Methodist Episcopal Church
  • Hispanic Federation
  • Independent Women’s Forum
  • Latinos in Information Sciences and Technology Association (LISTA)
  • League of United Latin American Citizens (LULAC)
  • National Council of Woman’s Organizations
  • National Latino Farmers and Ranchers
  • New York State Federation of Hispanic Chamber of Commerce
  • National Black Chamber of Commerce
  • The Latino Coalition
  • Women Impacting Public Policy
  • Women Involved in Farm Economics
  • Many, Many more

My question, however, does Congressman Rush care about the CONTENT of the channels, or simply the OWNERS of the channels? According to the article, he points out that “people of color” make up 35% of the American Population and says, “I see no reason why a combined XM-Sirius satellite radio company should not dedicate a number of channels for minority ownership that is more reflective of the general population. [emphasis added]. Perhaps Congressman Rush is not aware, but the current President and Interim CEO of XM Satellite Radio is Nate Davis, an African-American.

So, which is it? Are we supposed to care more about the content that is being broadcast or the people who own the station? To me, I could care less who owns the station. To me, it matters what is being said and what is being played. As indicated above, some of the most powerful and popular minority interest organizations have supported the merger based on what is being broadcast.

Do you know what the greatest thing is though, Congressman Rush? If you are more concerned about minority ownership in Satellite Radio than what is being broadcast, it is a publicly traded company and you can always buy shares. Congratulations, you are now a minority owner of a Satellite Radio Company.

In addition to what Newman noted, there is also programming geared towards women, and even a channel dedicated to the gay and lesbian community.

One e-mail I received today points out more some compelling items:

"I would emphasize, as stated in the above letter, that these are publicly traded companies. Not only does that allow minority ownership, not limited to 20%, but as much as 100% of either or both companies or the merger company for that matter; it allows entities such as Primosphere, which seems to believe it has some claim to spectrum because it made a failed bid in the last century, to buy one of these companies, if they want. If fact, entities such as Georgetown Partners and Primosphere could have bought Sirius at bargain prices just a few years ago, in 2002 – less than $2 a share when there were less than 100 million shares outstanding and further, the debt at 25-50 cents on the dollar when the long term debt was less than $700 million. The entire ball of wax, debt included would have been less than $1 Billion.

But instead of any of these entities buying Sirius or any of the larger media companies that seem to fear the Sirius/XM merger, Sirius found a half a million small shareholders willing to take that chance at owning a satellite radio company – truly diverse ownership that is completely color blind or class blind.

Looking back, buying a satellite radio company was pretty cheap in 2002 – and entities such as Georgetown Partners (or their “minority” partners at the time) or Primosphere could have had 50% of the available spectrum. Why didn’t they buy Sirius or XM then? Apparently they didn’t want to take the same risk that Sirius or XM shareholders were willing to take at the time. Now those entities that wouldn’t take the risk that 500,000 plus Sirius and XM shareholders took then, want the FCC to effectively give them spectrum at bargain prices, after much of the risk has passed.

As stated in the above letter, if you want to own a piece of satellite radio, then buy it. Both companies trade on the NASDAQ every day. If you want a controlling interest, buy a lot. The FCC should not be in the business of taking away assets of one publicly traded company with hundreds of thousands of small diverse shareholders and giving them away to private interests, minority or otherwise, at bargain prices."

If these companies and people want divers ownership, where were they when Clear Channel was going Private to Bain Capital? Why didn't these groups of people demand that 20% of the Clear Channel stations be dedicated to minority owners? Why are these people and groups not already buying into SDARS? Why isn't Primosphere buying shares on the open market and by extension gaining the ownership they desire? Why isn't Chester Davenport negotiating with the companies instead of the FCC?

Ironically, no matter what the outcome of the merger, as publicly traded companies, any person or group can buy as large a stake as they want. The question is this. Should the proposed merger be the platform for stripping away "ownership" that diverse shareholders in 2002 established? Should those that took all of the risk in the beginning be asked to give up the fruits off that risk in favor of new players with deep pockets that seem unwilling to take on any risk at all? Where was Primosphere in 2002? Where was Ibiquity? Where was Georgetown Partners? In fact, where are they today? Are they buying into these companies now, or simply trying to gain an interest in the form of a FCC concession that comes at a cost to those that took the initial risk.

Sirius and XM already have diverse programming. They have expressed an interest in increasing that, while at the same time allowing some diverse ownership to happen. There are many things to consider in this merger process. Let's not forget about the diverse shareholders who were here when the risk was at its peak.

A special thanks to Newman and the e-mail contributor.

Position - Long Sirius, XM.