Attorneys General Lobbying Against XM-Sirius License Transfer

In addition to an increase in public and ex parte filings (primarily a result of Monday's DOJ approval), the FCC is now being lobbied directly by 11 state attorneys general to essentially impose strict conditions, if not outright deny, the license transfer in the Sirius (SIRI)/XM Satellite Radio (XMSR) merger. AGs from the eleven states sent this letter to FCC Commissioner Martin expressing their concerns and requests for conditions to be imposed by the federal regulator.

Normally, AG interventions are perceived as mostly publicity and generally harmless to the timing and mechanics of a merger transaction. One or two AGs becoming involved rarely has any substantial impact on any given deal. However, a consortium of AG's like this one could easily influence and impact the pending FCC review beyond what the companies currently anticipate.

The AG situation only increases the pressure the FCC must now feel as a result of the DOJ's non-action last week. The entire onus of regulatory enforcement, in this case and future high-profile communications merger, is now squarely on the shoulders of the FCC, and particularly Chairman Martin. Thus, it comes as no surprise that the final decision has continued to encounter delays. Nor should it be a major revelation that intervenors continue to meet the FCC and/or submit filings in opposition or demanding a variety of substantial conditions.

It is impossible to suggest that the FCC will actually take the unprecedented action of declining the license transfer after DOJ consent. While a decline outcome is technically possible -- and this merger certainly represents a clear opportunity to do so -- the current leadership of the FCC is simply not the type to take this sort of extraordinary measure.

However, as this is a glaring opportunity for the FCC to establish itself as a legitimate merger regulator in the future, it would not be terribly surprising to see conditions imposed that go well beyond what the companies seem inclined to accept. The companies stated in the past the spectrum divestitures are "not on the table", but it may indeed be a concession of this magnitude that the FCC demands here. This would naturally require a great deal of negotiation between the regulators, the companies, and third parties, and this in turn would naturally translate into further delays.

Furthermore, if the FCC does indeed view this transaction as the defining merger-related enforcement action under the current leadership, the severity of the conditions could conceivable force the companies to re-consider the rationale of the transaction. This is not perceived as a highly likely outcome, but it certainly can not be discounted given the circumstances of this proposed merger.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.

Comments

[Tom Burns]

This is old news please give it up.

[User 168418]

With the high cost of oil over a $100 a barrel, the slipping economy, the rise of gasoline to maybe $4.00 a gallon and other expenses XM and Sirius Satellite have tough times ahead and as we know the satellite radio is competing with many different forms of entrainment such as HD RADIO, IPODS, MP3, I PHONES, TVIO, CD's and of course TERRESTRIAL RADIO I am sure the FCC position is to have a free market and not drive one or both of these companies to bankruptcy? Remember nobody is forced to spend one red cent if they choose not to have satellite radio. In America the choice should be with the people of this great land and I believe the people have spoken loud and clear with the exception of selective lobbyist groups and 11 Attorney Generals for political reasons are trying to prevent competition in the broadcast business.

The Department of Justice's careful and thorough evaluation of the proposed XM-SIRIUS merger proves that this transaction is not anti-competitive and is in the public interest. Following their merger, the combined company will be able to provide even more unique and diverse programming for rural audiences that are currently unavailable on traditional radio. I urge the FCC to consider these and other important benefits and allow the merger to proceed." without further delay.

email that to the FCC .........!!!!

[User 168418]

Chairman Martin's Contact Information
Room: 8-B201 • Phone: [phone] • E-mail

----------------------...
Federal Communications Commission
445 12th Street SW
Washington, DC 20554
More FCC Contact Information...
Phone: 1-888-CALL-FCC (1-888-225-5322)
TTY: 1-888-TELL-FCC (1-888-835-5322)
Fax: [phone]
E-mail: [e-mail]

[Newman98]

This letter was published a week ago. It is old news.

Besides that, the letter requested 3 things: A la carte programming, interop radios, and spectrum. 2 out of three have already been promised. Spectrum is pretty much a given as long as it is around the 5% that is being asked for by consumer groups as opposed to the 20% being requested by a for-profit money hungry race-card playing certain company (no names mentioned).

This letter should not have even made the news. The only thing that wasnt known before is how they were "disappointed&quo... with the fact that there were no conditions attatched...

Never did they say there were against the merger outright.

[twisstedwords]

The group of "11" seem to be a bunch of self seving A-Holes. They are not looking after the best interest of the consumer or the business model. I would be interested to see how many of the 11 have taken contributions from the NAB. I am happy I have the choice to be able to listen to radio that I PAY FOR that is not bombarded with commercials & D.J. noise that is unlistenable!!!! Now i have an opportunity to get Major League Baseball & the NFL on the same channel but some douche bag politician has to stick his nose in it??? its RIDICULOUS!!!! They jerk offs should expend this kind of energy making their districts & states a better place instead of standing in the way of a LUXURY item that i will decide to pay for or not. Seems these Idiots should have shown the same zeal for seeking a peaceful solution in the Middle East instaed of the tempest in the teacup they are opposed to that makes them feel important. Hey 11 G.F.Y.S. (get it)

[pain]

I am tired of the Bull shit! These AGs are pathetic. Someone tell them to worry about real issues. One asks what are their real motives behind their actions? They are viciously holding up this merger without shareholders or public consent. I would also like to know if these AGs are shareholders or even subscribers. Their actions are cruel and irrational and blatantly murdering a great opportunity for these companies to achieve success. At a time where the economy is in a tragic state of misery where cutting costs and consolidating are companies only options. I feel like we are in a third world country with greedy people in power not concerning with the public sentiment. Their actions are next to near evil not showing any remorse or even showing that they even care for the well being of the two companies and their shareholders. Our government is bailing out bear sterns working over the week end to complete the transaction. The FCC has taken way too much time and are viciously treating us like criminals with no love what so ever. Do they feel at all for a proud American company trying to do their best. Instead they are try to destroy an American Company putting them through grueling testimonies of phony AG's with hidden agendas. Investigate what why these loser AGs really what to prevent this merger. They don't care about the People of America. They only care about themselves. Viciousness at it's finest!

[Ace22]

Yes m&a your reserch sucks we all have heard this before only in less adjectives.

p.s. i highly agree with twisted, i would really like to know if any of the 11 took contributions!

[SPR]

We already know that the NAB has bought 77 Congressional representatives. Now we learn (not surprisingly) that they own 11 AG's. The NAB would do well to start cleaning up their own house so they are prepared for the digital wave that is sure to overtake them, just as the television broadcasters have been hit. Okay, the NAB owns Martin, but he won't be there forever. Sooner or later the FCC will want to sell the spectrum that terrestrial radio is using and terrestrial radio broadcasters will be forced into a narrow digital segment. Are they ready for that, or would they rather spend their time trying to deny advanced service to the American public?

[User 171631]

I'm so ashamed that Ohio's AG is so involved in this issue .. The question is WHY?  First thoughts would be.. its time to pay up for campaingn contibutions... or future ones.. He ought to be clearing up Ohio illegal school funding issue..

[manchester]

Again, you have proven yourself to have no credibility in regard to this transaction. The DOJ is the anti-trust police; not the FCC. There is not one chance that divestiture of spectrum is a possibility and anyone with any intelligence would know that the FCC's hands are tied.

[ripped]

Any imposed conditions can still be challenged legally by the parties and their counsel, not to mention, the shareholders.

It isn't a simple, "you take this or else" situation. That's not how democracy works in this instance. Just like they could have made the justice department defend (in court) a decision to prevent the merger, they can also challenge key disputes in a court of law if Martin and the FCC attempt to cut their nuts off.

The FCC is not an omnipotent body to Americans, and or, American companies. They cannot impose their will without being subject to due process. It's how America works.

And they know what a "Discovery" process would mean for the people who seek opposition. There are worms stuck throughout that piece of wood. And none of the opposition wants to go there.

At any rate, wild concessions are in fact challengable, which is why Martin needs to get this right on the first pass.

You'll probably only see demanded a la carte choices with a couple being frozen out a few years, and some public access stations (maybe two or three).

They won't make it carry HD radios unless all HD radios also are built to accomodate satellite, as that is a for profit venture.

General price controls and/or a taking of spectrum could both be challenged. As much as voiced opposition wants to play that card.

Next Friday is the day.

[cos1000]

It is clear that these 11 states AG's are complaining to the FCC Chairman because the DOJ has already found their outrageous claims and requests to be invalid.

As already suggested their motivations are political in nature and have nothing to do with seeking justice for their state's consumers but rather seek profit for the companies supporting their elections.

Sirius and XM have invested millions of dollars over a decade of years at developing the competitive advantages that oponents to the merger are asking the FCC to rob from the Merged Company and give to them for free. These AG's are supporting this robbery. Who are they kidding.

[ripped]

yes

[User 168418]

The DOJ got it right now it's time for the FCC to give it right. The 11 AG are self serving. Time have change the playing field the merger is the right thing to do and FCC needs to step up. here is the FCC E-mail info. E-mail them until they get the message. I am wondering are the other 40 AG supporting the merger.

Chairman Martin's Contact Information
Room: 8-B201 • Phone: [phone] • E-mail

----------------------...
Federal Communications Commission
445 12th Street SW
Washington, DC 20554
More FCC Contact Information...
Phone: 1-888-CALL-FCC (1-888-225-5322)
TTY: 1-888-TELL-FCC (1-888-835-5322)
Fax: [phone]
E-mail: [e-mail]

[Abusnevets]

In what world do these AG's think this is a monopoly? No one is going to suffer if they don't have satellite radio! It's not electricity or natural gas. If they charge too much I'll stop subscribing. If the service suffers because of supposed monopolistic tendencies to stop innovating, I'll stop subscribing. But, as I contend, they want to make money, and want me to tell other people it's a "must-have" and changes the way you listen to radio (sorry NAB but it does) then I will continue listening. Enough already.

[163888]

What a moron, Next time why dont you read Tylers article first. They have not even come close to saying it should be denied by the FCC. What they have done, is ask for concessions that have been out there for the last year. All but one of them are not a big deal and have basically been agreed to by the satellite companies.

[YoungInvestor]

From this standpoint I think a merger might actually hurt both companies. With the rules and regulations they would place on the industry it would not have the opportunity to flourish and be able to transform the medium into something great. Initially I was for the merger but now I say let the companies slug it out and the winner can own the market without any major restrictions

[renoirbud]

My letter to the FCC

Hello Chairman Martin;

I hereby respectfully request that you permit that XM and Sirius Radio merge as soon as possible. I enjoy the service and wish for it to continue being available. The current model of having two companies has proven to be non-profitable and we may lose the industry.

Destroying these two companies by not allowing them to merge would be un-American and would be a slap in the face of innovation. Innovation is one of the only things that the US can bank its future on. If we take this last Ace out of our deck, we will live in a Euro based world soon. So we may all have to learn German after all, even after our great efforts in the 1940s.

I do not want to see the people that had the courage to developed this service be punished any further by delays.

Thank you for your time

[User 168418]

WHEN THIS MERGER IS FINALLY APPROVED IT WILL BE A WIN WIN FOR ALL JUST SIT BACK A LITTLE LONGER AND ENJOY THE RIDE IT'S COMING TO AN END REAL SOON AND YOU WILL HAVE GOTTEN YOUR MONEY'S WORTH.

[Smarty Pants]

Less than 3 weeks ago, you wrote that the merger was still a longshot and:

"This will possibly be the final detailed analytical entry for this transaction."

This transaction is like cocaine for you, isn't it? You just can't stay away from it. Get some help. Addictions like this never turn out well for the addict.

[goducks]

Please, please check out M and A 's link to his website. How on Earth do you get away with anyone trusting you when you have a website straight out of 1981, are you making money on you subscriptions?

I have read every single entry you have posted on this subject and your accuracy is 0%. What is your qualification or reasoning behind these abstract and inaccurate assessments? Just curios.

[User 163772]

The AG's should be spending their time finding out why big oil companies are being allowed to rip off the American public. Also, they should be looking at the hoax being perpetrated against Americans through the ethanol program. Their motive behind this effort to impact this merger is suspect to say the least and is reprehensible.

[User 168418]

The AG's and the FCC should focus on cable TV why do I have to pay for 6 spanish stations I dont want with my family cable package.

[User 168418]

How to Contact the FCC

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[Ace22]

wow, goducks i just checked out his site, he wants 5,000.00$ for a yearly subscription, lol. M&A are you smoking rocks?

[goducks]

From M & A Website:

Advanced, easy-to-navigate web design. The M & A Researcher utilizes a convenient frames environment for rapid access to critical information throughout the site. Subscribers have the option to view updates in single-line, link format, or in streaming update format. Additionally, all content is presented in carefully organized and structured formats, enabling subscribers to easily locate specific information including, but not limited to, research, analysis, event and regulatory updates, and calendars.

From 1996 regrading use of frames in HTML:

www.useit.com/alertbox...

Jakob Nielsen's Alertbox for May 1996:
Original Top Ten Mistakes in Web Design
1. Using Frames
Splitting a page into frames is very confusing for users since frames break the fundamental user model of the web page. All of a sudden, you cannot bookmark the current page and return to it (the bookmark points to another version of the frameset), URLs stop working, and printouts become difficult. Even worse, the predictability of user actions goes out the door: who knows what information will appear where when you click on a link?

Point?
How can one trust someone analyzing modern technical institutions when the author has apparently stopped updating his use of technology in 1996.

Yes , 11 AG's are against the merger, yes John Kerry made a comment, yes my father asked me to update his Windows 98 yesterday to XP, yes phone books still have pone numbers, yes you can even buy stuff on the inra-WIde-World-net. This is why Silicon Valley and technology [my industry] are so far ahead of Government. Please at least look like you are one step ahead of the Gov't not In-step with it otherwise your analysis is DOS in a Unix world.

[oregonduck]

The reality is that attorney generals are elected officials. They do not represent their state in an attorney-client capacity. They do not provide independent legal opinions. The FCC is clearly being pushed by political powers to make a decision against the Merger. Mr. Martin is a Bush appointee, and I doubt that he is going to be swayed by politicians who are primarily liberal. I am from Oregon, where we are greatly benefitted by XM and Sirius based on the fact that most of the state is rural. Quite frankly, most of California is rural and we do not get premium broadcast radio. The FCC knows this. M and A, I believe, benefits from supressed stock prices for a longer period. I think that a lot of people are benittiting from the supressed price right now and are going to make a lot of money in the next few months.

[Smarty Pants]

Why were all the comments deleted?