tyler1.JPGThe proposed merger of Sirius and XM Satellite Radio has brought to light an urgent need for additional satellite radio spectrum. Only 6 years ago, when the concept of SDARS was barely breathing, no one seemed to care about satellite radio. Companies and interest groups alike paid no attention even though less than $1 Billion could have bought one of these fledgling companies with all debt included.

A few brave institutional buyers, and many small retail investors saw the potential, and absorbed the risk to see if their investment could help a concept grow. Most however, went about their merry way, and never gave satellite radio a second thought. Now, in 2008 the fruits of satellite radio are much closer to fruition. The concept has rooted and begun to branch out. A large portion of the risk has dissipated, and the satellite radio companies are better able to weather the storm. It is at this point that a crisis has now enveloped the industry.

THERE SIMPLY IS NOT ENOUGH SPECTRUM:

  • Primosphere wants 30%
  • Georgetown Partners wants 20%
  • The National Hispanic Media Coalition wants 15%
  • Clear Channel and others feel that 50% should be given up.

Already we are over 100%, and this presents a problem. To solve this problem, we will break down the spectrum by category. According to the US census and other data (see links for source):

Wait a minute, all of this adds up to 162%, and we have not even gotten into religion yet!

I have a solution. When SDARS was first being considered in 1995, there was 50MHz of spectrum being considered by the FCC (2310 MHz through 2360 MHz). At a point late in the process, 25 MHz was held back. As it turns out, now that everyone realizes that SDARS is viable, that additional 25 MHz of spectrum is badly needed. Perhaps another solution would also be workable. The WCS spectrum has not been used for quite some time. Perhaps carving up that spectrum would make use of it and solve all of the issues that WCS has been dealing with.

Now I realize that all of this will take some doing, but having ownership that is representative of the people and the population is important. Surely we need the government to mandate this, as we citizens must not be capable on our own... right?

WRONG

Capitalism is the solution. Investors that are men, women, black, white, gay, lesbian, seniors, Asian, and Native Americans can all own as large a stake as we want in SDARS. Companies of any size and background can own a stake. Primospere wants 30%...They can buy it on the open market in either company. That would even get them a seat on the Board of Directors. Chester Davenport of Georgetown Partners wants 20%. He can buy it just like me, you, and all of the other diverse shareholders in these companies.

The real question is why should those diverse shareholders that have taken the initiative to invest in these companies over the years be required to have the possible fruits of our investments stripped away? There is no need for any group to demand anything. They can buy away to their hearts content right now.

Why is it that a merger brings about this sudden need? If the merger were called off next week, would these same groups be petitioning the FCC to strip away spectrum? The answer is no. So how is "'diverse ownership" only important in the circumstance of the merger?

Diverse programming is a wonderful thing. Educational programming is wonderful as well, as is children's programming, and entertainment programming. Does not SDARS already offer programming that fills these needs? Has not SDARS taken steps that no other radio broadcaster has ventured into? Lets stop this charade. The ownership of SDARS is as diverse as the investors in these companies. That diverse mix can change at any time because these companies are traded on the stock market. Groups do not have to wait for a special circumstance to arise in order to participate. They can participate whenever they want.

It is time that the FCC arrived at their decision. Plain and Simple

Position - Long Sirius, XM.