Terrestrial Wants In On Merger
Months ago, when Georgetown Partners began their quest for 20% of the SDARS spectrum, I composed a list of questions that I felt should be answered. Among those questions was whether Georgetown was looking to build their own satellite radio company, or merely going to act as an “auctioneer” of channels to terrestrial radio broadcasters.
What I noted then was that Davenport lacked radio experience. I found it odd that someone would seek 20% of the SDARS spectrum (about 60 channels), and not have a plan as to how to fill that spectrum with content. I alleged at that time that perhaps the plan was to grab the channels, and then go to terrestrial radio giants like Clear Channel, CBS, etc. and offer them blocks of channels that would be available in every market.
I also found it odd that the National Association of Broadcasters and terrestrial radio stations were dead silent on this issue, despite the fact that Georgetown was having meetings with the FCC at a break neck pace. Had Sirius or XM proposed 60 channels of free commercial supported radio, the NAB and terrestrial radio giants would have filed complaint after complaint with the FCC. Somehow though, the proposals of Georgetown Partners got no response at all from terrestrial radio.
Now, in the eleventh hour, Georgetown’s Chester Davenport has announced that he is prepared to partner with Entravision to help fill all of the channels he is seeking. Entravision is a Spanish language based media company with 48 terrestrial radio stations, 41 of which are located in the top 50 Spanish markets in the United States.
Perhaps the most interesting item to note is that Entravision is NOT minority owned. It is a publicly traded company just like Sirius and XM. Entravision is traded on the NYSE under symbol EVC. Literally, from an ownership standpoint, the shareholders represent the owners of the company. Entravision simply has a business model that is based on minority programming. The fact of the matter is that “minority ownership” of Entravision may be more or less than Sirius and/or XM. It all boils down to the demographics of the investors. The fact of the matter is that there is nothing stopping Sirius and XM from offering diverse programming… in fact, they already do.
It would appear that what we have here is a minority business man, Chester Davenport, that simply wants to act as a middle man. Being a minority would give him certain competitive edges in obtaining the rights to spectrum, but in reality, the operations of the business may well have nothing at all to do with Georgetown Partners if they are simply a “paper owner”.
For clarity, I have nothing at all against having minority programming. Entravision delivers quality content, and it would be wonderful to see their business expand. The question is why Mr. Davenport is even needed in this situation. Is it simply to “qualify” as a minority owner? What is more important? The ownership, or the content delivered to consumers?
Davenport argues that the seizure of 20% of the spectrum would only impact 2% of the subscribers of Sirius or XM. He supports this by stating that subscribers only “listen to” a finite set of channels on SDARS. That argument falls flat because one of the compelling aspects of SDARS subscribers is the ability to have a wide variety of content. Stripping 60 channels out of the SDARS line-up is not a 2% impact. See what happens with SDARS subscribers if 60 channels suddenly fell from the line-up. Do you think customers would complain? You bet they would.
Further, the primary products of Entravision are three channels. They broadcast through a centralized production facility and their leading products are music formats:
- Super Estrella, a music-driven, pop and alternative Spanish rock format
- Radio Tricolor, a personality-driven, Mexican country-style format
- Jose, a mix of Spanish-language Adult Contemporary hits from the 1970’s to the present.
This would use 3, and maybe as much as 6 out of the proposed 60 channels. What has Davenport promised for the rest? To quote from his own filings, “Family friendly commercial supported programming that meets FCC decency standards”. News flash… when Howard Stern was on the terrestrial air waves, his programming was “family friendly programming that met FCC decency standards”.
For Georgetown Partners, bringing out Entravision could well be an attempt to state that the 20% would be African American as well as Hispanic based. I do not buy it. Not for a second. If Davenport ever wanted to make money on a national basis, he will need mainstream programming. Whether rap, country, rock, or talk, the breadwinner type programming needs to be a part of the mix. In my opinion, Georgetown Partners is simply hiding this bit of information.
What value would having KISS FM on in every market carry for a terrestrial radio giant? Think about the most popular formats being available on terrestrial, HD, as well as satellite all under the control of a Clear Channel or a CBS? Program the show and broadcast it in every medium. Don’t forget Internet radio. All of the big boys also broadcast globally on the net.
Chester Davenport is a smart man. He was smart enough to ask for and receive meetings. He was smart enough to bring in consultants with relationships to Martin. He is smart enough to play the minority ownership card in such a way that limited other minority competition. He was smart enough to keep his plans veiled. He was smart enough to not answer the questions raised by Sirius Buzz, and he was smart enough to avoid daily calls from this writer for weeks on end. Did we see something that Davenport did not want us to see?
Davenport will not get what he wants. What he is seeking is a merger deal breaker. While his efforts have been less than transparent, a bit of reading between the lines will get anyone to the motives behind the Georgetown Partners proposal.
I am not against minority programming or ownership. From a consumer perspective, all I care about is what programming is delivered, and whether programming exists on the service that meet my taste. From an investor perspective, the same is true. I do not care whether SIRI, XM, or EVC are invested in by any race. It simply does not matter. What I am against is a spectrum grab under the flag of “minority” when we have not been ensured that such ownership would center their business around that concept.
Simply stated, the Georgetown Partners latest proposal raises more questions than ever before, and perhaps sheds a bit of light on what exactly is being put on the table.
Georgetown Partners FCC Filing
Position – Long Sirius, XM. No Position Clear Channel, CBS, or Entravision.
This is another thing that is being overlooked by investors and the Media. The responsibility the FCC has here.
If we ever (God Forbid) have an emergency like 9/11 or larger, local AM/FM will be of little value to the 120 million Americans who are driving into work on a Monday morning. The NAB HATES this issue being raised and few are aware of Satrad value and participation in public safety… lord knows Mel, John Kerry, Brownback, Dorgan, or the NAB has brought this up.
What will the opposition say about the demise of Satrad if a city like LA is removed from the map?… will WXYC in Kentucky be there to serve?
I think along the lines of spectrum forfeiture, a channel known for public emergencies would be wise and it’s so easy that no one at the FCC has mentioned it.
FCC Announces Plans to Create a Public Safety and Homeland Security Bureau
The FCC has announced that it plans to establish a Public Safety and Homeland Security Bureau (Bureau). The FCC hopes the new Bureau will provide a more efficient, effective, and responsive organizational structure to address public safety, homeland security, national security, emergency management and preparedness, disaster management, and other related issues. The Bureau will be organized into three divisions: the Policy Division, the Public Communications Outreach & Operations Division (PCOOD), and the Communications Systems Analysis Division (CSAD). The Policy Division will oversee policies and issues relating to 911/Enhanced 911, Public Safety Answering Points, operability and interoperability for public safety communications, communications infrastructure protection, network security and reliability. The Policy Division will also handle the licensing of spectrum for public safety entities (e.g., police and fire departments). The PCOOD will be the lead division responsible for coordinating the FCC’s emergency response procedures and operations. The division will coordinate the FCC’s public safety, homeland security, national security, disaster management and related functions on a day-to-day basis and during incidents or other emergencies. The division will also be the lead point of contact for all inter-governmental coordination activities with other Federal departments and agencies. The CSAD will administer the FCC’s information collection requirements (e.g., network outage reports) and perform analyses and studies concerning public safety, homeland security, national security, disaster management, and related issues. It is unclear what responsibilities will remain with the current Wireless Telecommunications Bureau. Before they become effective, the FCC’s changes are subject to Congressional notification and the FCC must work with the National Treasury Employees Union Local 209 to secure its approval for issues affecting the FCC’s workforce.
XM-Sirius Merger: Facts get lost by the shouting of the minority.
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There are 50 Senators and 435 Representatives
in the House. A total of 503 elected Representatives of the people.
Only 72 House members have opposed this verbally and/or in writing. Only 8 Senators Kerry, Leahy,Kohl,Cardin, McCaskill,Brownback, Dorgan and Snowe ) have opposed this merger.
Of all Senators those in written and oral opposition represent only 16%. Of all House members those in written and oral opposition represent 15.8%. Of all Attorney Generals the 13 in opposition represent 26%.
Looks to me like 84% of Congress and 74% of States AG’s have no issues with the merger.
Please circulate this throughout the web and forward to the FCC members if you support this merger.
Is it true Chester Davenport made all his money by writing letters postmarked from Nigeria offering free money?
So they want to be the middle man with 60 channel! Are they nuts? Mel has the experience and contacts to do this all on his own and make millions on the leasing deals! Are these people that stupid? Must be!
I don’t know Tyler, this could be a bit of a stretch. Just because a company is publically traded — doesn’t make it non-minority.
In fact, a large percentage of their shares are owned by their (hispanic) senior management. Plus, until recently — over 30% of the shares of Entravision were owned by Univision… which is undoubtedly a minority company. However, when Univision bought out Hispanic Broadcasting (HBC) recently — as part of their settlement with the DOJ and FCC — they were to sell their stake in Entravision.
While I know what you’re trying to say — however, their BOD and senior management (for the most part) are minorities. And until recently, their largest shareholder was a minority company — in my broadcasting world, they are still very much considered a minority owned and operated company. There was always HBC, Uni and Entravision — those were the large Latin operators.
I am surprised by this move be Georgetown, nonetheless. They should have partnered with Radio One… though they are REALLY cash strapped right now.
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This leads me to believe the merger will go through as Mel has planned. Hopefully it will happen soon so that 2009 models will have the new radios installed.
homer, the problem is even if it is minority owned at this time that could very well change at anytime being a publicly traded company. really you could never say that any company will always be a minority owned company. Everything is for sale it is just how much do you want to pay.