In a filing with the FCC Chester Davenport of Georgetown Partners is defending his position and proposal as it relates to the merger. Davenport states that he is not seeking a federal subsidy or designated entity status, but is instead seeking that there be two entities in satellite radio.

Davenport proposes that 20% of the bandwidth of satellite radio be designated to a minority controlled company that would offer advertising supported satellite radio for free using Sirius and XM’s infrastructure.

Davenport claims to be ready to “negotiate” a lease with Sirius and XM for the use of their facilities. The problem I have with this proposal is that it is short circuiting a process that capitalism is built on. Davenport is indeed seeking a special status, as he is trying to use government regulators to force a negotiation to happen. Should the FCC agree that some spectrum should be allocated for such a proposal, it would hamper the negotiating power of Sirius and XM.

If Chester davenport wants to have a 20% stake in satellite radio, he can do so by investing in these companies. Both are publicly traded, and Davenport can buy shares at his whim.

The fundamental issue with the Davenport proposal is the route he is taking in trying to gain access to SDARS. Has Davenport even tried to negotiate with Sirius and XM? Why can’t Davenport come up with shows that he can approach Sirius and XM with. Why should Sirius and XM be forced into subsidizing an advertising driven model? Why can’t Sirius and XM themselves develop such a model?

Davenport claims that his “lease” would fully compensate Sirius and XM for their facilities. Sirius and XM are publicly traded. Will the Davenport proposal fully compensate the shareholders of these companies? Is Davenport ready, willing and able to make good or help offset the hundreds of millions in costs that have been already been absorbed by shareholders? Will Davenport be able to pay for future satellites or satellite launches?

Davenport is seeking roughly 60 channels worth of bandwidth, yet has not even attempted to define the programming he is proposing other than to state that it is “family friendly”, which is a term used to define the rules that terrestrial radio stations currently operate under. Likely, because he is proposing free radio, the decency laws that currently exist would apply.

The proposal was put forth in the eleventh hour, and is trying to use the government to shake down SDARS. The question that needs to be asked is what exactly was the epiphany that davenport had. Was it the possible dollars to be made, or a true desire to see diverse programming. Davenport has no real experience in broadcasting, has not demonstrated what his business would look like, has not indicated any outside investors to finance the operation, and has not any real justification for the route in which he is trying to negotiate.

Mr. Davenport, if you are going to come to the party late, you better have a hell of a good reason that is clear, concise, and carries more content than your filings thus far. By the vagueness in your filings, one has to wonder if Georgetown partners is even capable of having what the propose running in any meaningful way. If you want to have a stake in satellite radio I suggest you call your broker.

Position – Long Sirius, Long XM