XM Filing May Hold Merger Clues
Before everyone jumps to a conclusion that the merger decision is now complete, I want to caution readers that this piece carries some assumptions, and some reading between the lines. Like a puzzle, you oft do not need all of the pieces to have a general idea of what the picture has in store.
In a filing with the SEC today, XM pre-announced many of their metrics for the second quarter of 2008. As with all quarterly announcements, people tend to focus on items such as subscribers, churn, conversion rates, etc. However, sometimes there is additional language that has some new nuggets that could have important meaning.
I believe that this may be the case with the latest filing with XM Satellite Radio. Look at the filing, skip over the subscriber numbers, the churn, the conversion rate, and the size of the loss. While all of these are important, it is a small item after the loss that grabs the attention.
“(excluding the impact of any FCC settlement)”
The reason I find this interesting is that it is commonly assumed that Sirius and XM have some enforcement issues at hand before the FCC. It is widely known that some of these enforcement issues have been the topic of discussion in Ex Parte filings. It is also known that Sirius and XM have been meeting with the enforcement bureau lately. Add to this the fact that it is rumored that commissioner Tate wants some teeth behind this merger, and we may have a glimmer of some activity on the enforcement front.
Most people generally agree that it is commissioner Tate that is the focus of this merger now. Knowing that Tate wants some teeth in this merger, and knowing that there have been several meetings with not only commissioners, but Tate as well could lead one to believe that perhaps some penalties for past infractions (or alleged infractions) are being negotiated in conjunction with the merger.
It is no secret that there are quite a few “gray areas” with regard to the licenses of Sirius and XM. These gray ares have been subject to interpretation, and in many ways have caused this merger more than a few sticking points. Because of this, it would be of little surprise to me if a commissioner would want concrete points that are fully detailed and understood by all parties. Getting to this point would eliminate “gray areas” and allow the process to continue.
It’s Good to Settle up on Old Baggage before moveing forward
Clear Path to move forward
Uh, “gray area”? never mind the interoperable thing, which you may think is gray even though its not, the enforcement stuff comm. tate may be worried about is the hundreds of violations of their repeater authorizations by xm and some by sirius. nothing gray there. xm was authorized to place a repeater at point A, and instead put in at point B (something, by the way, that would get a regular radio station shut down in two seconds flat).
There are indeed gray areas. The interoperable issue has been in the hands of the FCC for quite some time. The companies certified that they have complied, and the FCC has not stated one way or the other whether or not they agree. This makes it a gray area issue. Som feel that compliance has happened, others feel it hasn’t.
“hundreds of repeater violations”
XM had 19 that did not have autorization, 142 that were 500 feet away from licensed location, 221 at higher than authorized power levels, 21 with additional antennas, and 79 that were taller than authorized.
Sirius had 11 that “differ slightly” from authorized locations.
One may argue that the company with fewer violations is buying the company with more. One may argue that the management of the one with fewer violations is going to manage the merged company.
One could argue that in many cases, the repeater was located on the property where it was supposed to be located, but not at the specific spot. One could argue how much this really makes a diff.
Are there violations? yes. How substantial are they? That is for the FCC to decide. If the power level was 1% higher than authorized, it is still a violation, but not to the extent as if it were 100% higher. Therin is a gray area.
Google radio station violations and you will see that despite many violations, a station does not get shut down in 2 seconds flat. A process happens, and actions are taken.
Gray areas can include many things. Interoperability, repeaters, advertising, “local content”, modulators, video, data, testing procedures, WCS claims of interference, testing procedures, etc.
I’m sure these repeater infractions pale into insignificance when you start checking on cell towers.
Interesting points, Tyler. I know local content is another grey area and is likely one rationale for the inclusion of HD radio chipsets in future head units.