Georgetown Partners May be a Thorn to the NAB and Ibiquity
Let me get straight to the point. The Georgetown Partners proposal to the FCC is a blatant handout request. Imagine investing hundreds of millions of dollars into a business that is on the cusp of showing true viability and then having to give away 20% of it. That is exactly what Georgetown Partners is seeking, and they are bold enough to seek this without any REAL detail. As frustrating as this would be to Sirius and XM as well as shareholders, it should be raising red flags with the national Association of Broadcasters and the emerging HD Radio.
In past articles we have covered the Georgetown Partners Proposal and broken down various problems with it (Georgetown Partners Seeks Handout and A Deeper Look At Georgetown Partners), so there is no real need to cover that aspect of their proposal at this point. This article delves a bit deeper into concerns that The National Association of Broadcasters and Ibiquity may have with a proposal such as that offered up by Georgetown partners.
If Georgetown Partners were to somehow get their agenda attached to the proposed merger, there would be an instantaneous creation of a commercial based digital audio entertainment platform that is available for free to every satellite radio already built, as well as all future satellite receivers.
In many ways, Georgetown Partners is seeking the exact same thing sought by Ibiquity. A virtually free ride into a viable business platform. Imagine 60 satellite radio stations available for free on the national footprint that exists with satellite radio. One difference between satellite radio and terrestrial radio is the commercial load. Satellite radio carries commercial free music and relies on subscription fees, while terrestrial radio is free but carries a commercial load. Theoretically, if Georgetown Partners was in the equation, they would be competing quite heavily with terrestrial radio for advertising dollars.
Georgetown Partners has offered no detail on lease values, content that they would offer nor whether they would seek the ability to carry localized content. In theory, with 60 channels, what is to stop them from carrying a news station in each of the top 20 markets, and then have 40 channels of commercial supported music? There is a lot to consider.
Has the focus of the National Association of Broadcasters and Ibiquity been so narrow that they are missing what could be something that may be an even bigger impact on their business? Given FCC Commissioner Copps’ recent statements as quoted in a Radio and Records article, “some of the ideas that have surfaced, such as the a la carte pricing plan suggested by the would-be consolidators, and the proposal by a third-party entity to have some satellite spectrum reallocated to it, a minority controlled satellite radio programmer, could make for ‘interesting conditions.'”, the NAB and ibiquity may want to shift a bit of focus.
Clearly, there have been many filings where various parties want to try to get a piece of the pie, but the big players such as the NAB and Ibiquity have more at stake than they may think. Satellite radio with a “free” component that is based on advertising revenue, and perhaps even free of “local content restraints” is a much bigger threat than a pure subscription based service. The Georgetown Partners proposal would carry a much more immediate impact to the terrestrial radio business model, and could potentially make HD Radio face a climb steeper than they already have.
Personally, I think that the Public Knowledge Proposals carry the most merit and weight with regard to these issues. They propose that 5% (much more reasonable than 20%) of the channel capacity be made available for education and informational programming where Sirius and XM have no editorial control. Perhaps these channels could be offered free, but that is another subject altogether. With this solution, the shareholders who have invested into getting these companies where they are are not losing company value to what equates to a handout of an up-and-running business.
Some may extol the virtues of the Georgetown proposal and see it as a possible solution. At first brush it may seem nice, but then again communism seems nice in theory. Each person contributes the same effort and each person gets the same benefit. In practice some people work harder, and by nature will want a greater reward. Asking shareholders to give up 20% of everything that has been done, as well as 20% of everything going forward simply is wrong.
Public comments for the merger are overwhelmingly in favor of it. Outside interests are jockeying for position. At the end of the day, when the dust settles, what will satellite radio look like, and will all of those that bet their stakes on getting a piece of the pie wind up disappointed?
For Georgetown Partners proposals to be taken seriously, they need to offer far more detail than they have. They need to get beyond theory and down to dollars and cents. They need to acknowledge that they can not simply be handed a golden ticket. Ibiquity is in the same boat. They are seeking a golden ticket. I can’t blame Chester Davenport and Georgetown partners for their attempts. Nor can I blame Ibiquity. You never get what you don’t ask for. Ibiquity as well as the NAB should come up with some sort of response to the Georgetown partners proposal. The NAB has placed their bets on fighting the merger and has not sought concessions. I have felt that this strategy was flawed in that if the merger passes, they have nothing to show for it.
The opponents of this merger are so busy looking at their one side that they are not recognizing the potential of other considerations, and in the end they could well wind up with nothing or concessions that benefit the other parties looking for a golden ticket and not their own.
Position – Long Sirius, Long XM
Great idea, but a better idea would be if Clear Channel or CBS Radio gave up 20% of their respective radio stations to Georgetown Partners.
The above post is not mine.
However, to call Georgetown’s request a “handout” is nonsense. My understanding is they are willing to pay for what they get, but their are saying, “If you want to create a monopoly, SOME of that spectrum needs to be put in someone else’s hands”.
ON a rational basis, you cannot argue with the position. FCC has long supported and often required the idea of diversity amongst ownership.
It is totally reasonable for Georgetown to insist that XM and SIRI not be given all this spectrum to use as they please — particularly, in the wasteful manner they plan to use it (essentially, duplicating some broadcasts, at least for some years).
I don’t claim that Georgetown SHOULD be given this benefit, but I do claim the request is totally reasonable in the circumstances. I certainly don’t believe a merged XM and SIRI ought to be allowed to hold ALL the spectrum for SDARS.
You may not want to call it a handout, but that may be because you are not looking at the entire picture.
1. You say they are willing to pay for what they get. They have yet to produce ANYTHING approaching that they are serious about their “lease”. What they are asking for is 20% of spectrum, access to all all infrastructre (satellites, satellite operations, customer service, etc.). Are they willing to pay for R&D? Are they willing to pay for marketing efforts? Are they willing to pay for vehicle subsidies? Are they willing to pay for shelf space at retailers? Are they willing to pay for many components? These unanswered questions are substantial. What Georgetown Partners is seeking is worth literally BILLIONS. Do you think they are willing to pay BILLIONS? Do they even have access to such captial?
2. You say that Georgetown partners is saying, “if thy want a monopoly then someone needs to get that spectrum”. That is not what Georgetown Partners is seeking. Georgetown Partners wants georgetown Partners to get that spectrum. To come to a conclusion that that type of request is reasonable is a stretch to say the least. If you want to argue that spectrum needs to be given up that is one thing. If you try to argue that the spectrum shouldbe handed over to a specific company that is another thing altogether.
3. You state that it is reasonable that Georgetown partners be given spectrum because the broadcasts will be duplicated by Sirius and XM. This is not necessarilly the case. Music channels will be trimmed to programming that will service existing radios for a period of time. However, assuming that Georgetown Partners gets 60 channels do you think that they are programming different music? No, they are not.
4. Georgetown Partners is indeed seeking a handout. They are looking to circumvent the entire process of developing their own infrastructure, support, etc. to make a business happen. As currently proposed they are seeking an “up-and-running” business with little or no risk. That is a golden ticket, and that is a handout.
Perhaps this will explain things:
http://query.nytimes.com/gst/f.....wanted=all