In an Orbitcast article published today, they quote an anonymous source as saying that the NAB and Clear Channel have an end game in mind that involves the surrendering of Spectrum should a merger be approved.

The surrender of spectrum is not really an option in my opinion. Especially not in the amounts being discussed by the likes of the NAB and Georgetown Partners. In my opinion he surrender of spectrum is a deal breaker.

Sirius and XM, after five years have reached less than 5% of the market. To strip away spectrum would hamper the ability of these companies to deliver synergies that are the machine enabling satellite to better compete. Stripping away spectrum would be a tax that the mergco as well as shareholders should not be asked to bear the burden of.

These companies, in an effort to ensure that existing radios will operate after the merger need their spectrum to accomplish the desired goals. Stripping away spectrum does not create any new competition it simply hampers the ability of Sirius and XM to compete. Some proposals suggest that not only should Sirius and XM lose spectrum, but that they should make all of their infrastructure, marketing, and contracts accessible to another entity as a business on a silver platter. Again, this is a tax on these companies as well as shareholders.

As we have suggested before, the Public Knowledge proposal , of the companies agreeing to give 5% of the capacity available for informational and educational programming is likely the most reasonable suggestion on the table. In their proposal, Sirius and XM would still control their spectrum, and a number of shows would have no editorial control by Sirius and XM.

While the NAB may well want to see a spectrum surrender, their gain would simply be time. They would still have satellite radio to contend with satellite radio, and in theory perhaps have newer issues to face. In our article about Georgetown Partners being a thorn in the side of the NAB, we illustrated how such a proposal would carry a dramatic impact on terrestrial radio as well as HD radio. That article pointed out that FCC Commissioner Coops felt that spectrum surrendering proposals were "interesting". Perhaps the saying "Be Careful What You Wish For" hits close to home.

The bast case scenario for the NAB would be spectrum surrender that sits idle. Idle spectrum is not in the best interest of the consumer. If the surrender of spectrum impacts existing satellite radio consumers, and it would, then how is it justified. Merger opponents will state that spectrum surrender is necessary if the merger passes, but are they thinking deeply enough. Are they considering the costs that such a surrender would have on the companies as well as their consumers?

In my opinion the surrendering of spectrum is a deal breaker. There is no good way to implement it, and in the end consumers do not see true benefit. I have stated many times that the NAB should have been seeking concessions early in the process, and that they should have been taking an approach that tried to fight the merger, but also spelled out what concessions would make a merger more palatable. If their endgame was to seek a surrender of spectrum they should have spelled it out during the comment and reply period. At this point, it is too little too late.

For merger proponents, any surrendering of spectrum should be seen as a huge issue regarding the merger. Personally, I can not see these companies giving up on what represents the biggest asset that these companies have.

Position - Long Sirius, XM