Georgetown Partners' Latest Radio Proposal Raises Many Questions

Months ago, when Georgetown Partners began their quest for 20% of the SDARS spectrum, I composed a list of questions that I felt should be answered. Among those questions was whether Georgetown was looking to build their own satellite radio company, or merely going to act as an “auctioneer” of channels to terrestrial radio broadcasters.

What I noted then was that Davenport lacked radio experience. I found it odd that someone would seek 20% of the SDARS spectrum (about 60 channels), and not have a plan as to how to fill that spectrum with content. I alleged at that time that perhaps the plan was to grab the channels, and then go to terrestrial radio giants like Clear Channel (CCU), CBS (CBS), etc. and offer them blocks of channels that would be available in every market.

I also found it odd that the National Association of Broadcasters and terrestrial radio stations were dead silent on this issue, despite the fact that Georgetown was having meetings with the FCC at breakneck pace. Had Sirius (SIRI) or XM (XMSR) proposed 60 channels of free commercial supported radio, the NAB and terrestrial radio giants would have filed complaint after complaint with the FCC. Somehow, though, the proposals of Georgetown Partners got no response at all from terrestrial radio.

Now, in the eleventh hour, Georgetown’s Chester Davenport has announced that he is prepared to partner with Entravision (EVC) to help fill all of the channels he is seeking. Entravision is a Spanish language-based media company with 48 terrestrial radio stations, 41 of which are located in the top 50 Spanish markets in the United States.

Perhaps the most interesting item to note is that Entravision is NOT minority owned. It is a publicly traded company just like Sirius and XM. Entravision is traded on the NYSE under symbol EVC. Literally, from an ownership standpoint, the shareholders represent the owners of the company. Entravision simply has a business model that is based on minority programming. The fact of the matter is that “minority ownership” of Entravision may be more or less than Sirius and/or XM. It all boils down to the demographics of the investors. The fact of the matter is that there is nothing stopping Sirius and XM from offering diverse programming….. In fact, they already do.

It would appear that what we have here is a minority businessman, Chester Davenport, who simply wants to act as a middleman. Being a minority would give him certain competitive edges in obtaining the rights to spectrum, but in reality, the operations of the business may well have nothing at all to do with Georgetown Partners if they are simply a “paper owner”.

For clarity, I have nothing at all against having minority programming. Entravision delivers quality content, and it would be wonderful to see their business expand. The question is why Mr. Davenport is even needed in this situation. Is it simply to “qualify” as a minority owner? What is more important - the ownership, or the content delivered to consumers?

Davenport argues that the seizure of 20% of the spectrum would only impact 2% of the subscribers of Sirius or XM. He supports this by stating that subscribers only “listen to” a finite set of channels on SDARS. That argument falls flat because one of the compelling aspects of SDARS subscribers is the ability to have a wide variety of content. Stripping 60 channels out of the SDARS line-up is not a 2% impact. See what happens with SDARS subscribers if 60 channels suddenly fell from the line-up. Do you think customers would complain? You bet they would.

Further, the primary products of Entravision are three channels. They broadcast through a centralized production facility and their leading products are music formats:

• Super Estrella, a music-driven, pop and alternative Spanish rock format.
• Radio Tricolor, a personality-driven, Mexican country-style format.
• Jose, a mix of Spanish-language adult contemporary hits from the 1970’s to the present.

This would use 3, and maybe as much as 6, of the proposed 60 channels. What has Davenport promised for the rest? To quote from his own filings, “Family friendly commercial supported programming that meets FCC decency standards”. News flash……When Howard Stern was on the terrestrial air waves, his programming was “family friendly programming that met FCC decency standards.”

For Georgetown Partners, bringing out Entravision could well be an attempt to state that the 20% would be African American as well as Hispanic based. I do not buy it. Not for a second. If Davenport ever wanted to make money on a national basis, he would need mainstream programming. Whether rap, country, rock, or talk, the breadwinner type programming needs to be a part of the mix. In my opinion, Georgetown Partners is simply hiding this bit of information.

What value would having KISS FM on in every market carry for a terrestrial radio giant? Think about the most popular formats being available on terrestrial, HD, as well as satellite all under the control of a Clear Channel or a CBS? Program the show and broadcast it in every medium. Don’t forget Internet radio. All of the big boys also broadcast globally on the net.

Chester Davenport is a smart man. He was smart enough to ask for and receive meetings. He was smart enough to bring in consultants with relationships to Martin. He is smart enough to play the minority ownership card in such a way that limits other minority competition. He was smart enough to keep his plans veiled. He was smart enough to not answer the questions raised by Sirius Buzz, and he was smart enough to avoid daily calls from this writer for weeks on end. Did we see something that Davenport did not want us to see?

Davenport will not get what he wants. What he is seeking is a merger deal-breaker. While his efforts have been less than transparent, a bit of reading between the lines will get anyone to the motives behind the Georgetown Partners proposal.

I am not against minority programming or ownership. From a consumer perspective, all I care about is what programming is delivered, and whether programming exists on the service that meets my taste. From an investor perspective, the same is true. I do not care whether SIRI, XM, or EVC are invested in by any race. It simply does not matter. What I am against is a spectrum grab under the flag of “minority” when we have not been ensured that such ownership would center their business around that concept.

Simply stated, the Georgetown Partners latest proposal raises more questions than ever before, and perhaps sheds a bit of light on what exactly is being put on the table.

Georgetown Partners FCC Filing

Position - Long Sirius, Long XM, No Position Clear Channel, CBS or Entravision

Comments

[verggreatness]

blah, blah, blah,.....doesn't matter because if the merger doesn't go through Clear Channel will buy XM and have 50% of SDARS.....just get the merger done already because you bet Clear Channel would love to cash in and get XM at a steep discount.

[muley101]

Chester Davenport, John Kerry, and their ilk who want the combined company to give up half the channels have absolutely no credibility and therefore should be completely ignored by the FCC. Further, the combined company should allocate one channel at a time of the set-aside channels to truely minority-owned companies, not a block of channels to something like Georgetown Partners so they can profit from them while adding no value.

[omagod500]

This makes me pull my hair out - is our government really holding a billion dollar deal up for this garbage? Correction - does our government really expect us to buy that this is why they are holding up a billion dollar deal? (everyone knows why the deal is really being held up and it has nothing to do with minorities...)

[Gregg]

A book should be written about this when all is said and done. Everyone knows that lobbyists run the show but watching this story has made me sick and ashamed of our government. This comes from a guy from Chicago - the hometown of corruption!
Consumers want this merger. Has there ever been a merger so overwhelmingly endorsed by the consumers of a product??

Keep calling/writing the FCC and your congressmen.

[DisappointedAmerican]

To FCC;
You all should be embarrassed, and fired! You have lied and stalled enough. 180 day clock =a scam, by the end of the year=a Lie, by the end of the first quarter=another Lie, Shortly after the DOJ decision=another lie, Martin says he was having multiple drafts written months ago=lie. Now shortly and pretty shortly; but no drafts circulated in over a year and a half! Now By the second quarter again nothing…..What have they done in all that time????? DOJ has proven this is not a monopoly! Allow the licenses to be combined and stop pandering to every group out there! They have no right trying to get my Company for free, I paid for shares of my company and you have no right to give anybody anything that I own. If the minorities want more radio exposure let them go buy a radio station with their own money. This is a free country, not a socialist state. So allow the combo with no concessions other than what the companies agreed to begin with. I hope you are all investigated for this disgrace, you are going far beyond what the FCC was intended for and now you are using this unassigned power to destroy American confidence in our government, and any company you choose to destroy. Your stalling of this decision has cost me personally and many more I am sure, I hope the companies file suit for your stall tactics, the empire state building was built in less time. And both companies have now lost the Millions/ Billions due to your indecision. You have no right to cost companies so much. This is America, free market capitalism, remember? This is not a necessity it is a pay luxury service. Mr. Martin do you have a Boss that oversees you, or are you a free-bird with no one to answer to? I would like to speak to your boss because no common sense decision can take over a year to make. I don’t know of any company, employee, or anybody that can take so long to do a job and still have a job after showing this amount of incompetence. I want you and you group all fired. Here is a link to a video that shows how irrelevant you group is; www.youtube.com/watch?...
So in ending you appear to be protecting your buddies at the NAB, and pandering to any special interest group wanting something for free. How about the Americans you supposed to be protecting? By the length of time you have been taking means one thing to this American and that is you are saying FU to ME. And I want you Fired. I will be sending this to anyone that will read it, the sad thing about that is that unless it is accompanied with a check, I assume no government official will read it.

Signed; One disappointed American.

[bababoooie]

What's all the fuss here?

Top ten FCC acronyms:

10) Funded by Covert Contributions
9) Forgetting Congress’s Constituents
8) Forever Changing Competition
7) Fighting Competitive Corporations
6) Functioning Contrary to Consensus
5) Forcing Conditional Control
4) Forgetting (Time)Clock Covenants
3) Forever Counting Contributions
2) Functional Contributions Center
1) Funded by Clear Channel



Money, so they say, is the root of all evil today
- Pink Floyd

[PROTECT ANDSERVE 0310]

We need to request that the DOJ make FCC approve or disapprove the merger. email DOJ put pressure on them to put pressure on the FCC.

[ServedCountry for26 yrs]

Most of these articles are extremely compelling. It's amazing how far our government has deteriorated. I wonder if one of the reasons why the Patriot act was drafted at warp speed was to have more control over the ever growing base of resentful citizens of our spiraling country. I no longer proud of this country as I use to be and it saddens me deeply. Where ever you turn you see corruption and this lollygag merger is just another case in point. The US is no longer a government by the people and for the people. Lies backed by cover ups, protected by self serving laws for the elite have tarnished our government not only at home but overseas as well. The ugly American just gets uglier every day. Contrary to our leader’s propaganda, that attempts to paint a rosy picture in Afghanistan, the conditions are eroding there as well. Today I just read where there was a car bombing at an Indian Embassy. It just gets worse by the week and does anyone think it is strange that we have not heard much about Iraq. Reasons are obvious; we have failed there and are hoping for a win some where else. It' frightening and frustrating for us who keep abreast of the events not only here at home but overseas as well. We need a strong leader in this country and personally do not see much in the offering.

I apologize for not sticking to the merger topic, but I am so mad and frustrated that the only agenda that could put this to bed would be a rally or extremely large town meeting, so that we could show everyone in our country how ludicrous these proceedings have been.

I being a stockholder am bitter and extremely pissed off to think that someone as the right to give part of my wealth away to feed another self interest when they don't even have a prior financial stake in the venture.

[sdrucker]

Fellow stockholders of Sirius and XM, instead of just sounding off with comments that are only read by others with the same concerns, let's take action. I propose that on this Friday, 7/11, every stockholder of either company, call or email your representative in congress with a complaint about the FCC stalling tactic. As a group, on a single day, we can have a voice that will have a much better chance at being heard. This is the only way to combat the lobbyists and political backroom dealing that has stalled approval by the FCC. Between now and Friday, find out who your representative is and how best to contact them. There are several million of us and we can succeed if we work together!

[Neal Barkett]

sdrucker, I'm in for Friday! I'll contact my pol. reps.

[Neal Barkett]

It would be nice if Tyler could help us on this matter!

[GJELOSH197]

why ask tyler for anything since he recommended xm at almost $14..and its been cut in half..thanks for eradicating your readers investment monies you scoundrel! and i read that you only have ten percent in these stocks..you are unqualified to write anything about investments..maybe only comic books

[killerkaul]

197......... stuff that poor me ,whining crap in you ass.

[killerkaul]

197....... I didn't bother to proofread above, your comment wasn't worth the wasted time.

[DisappointedAmerican]

Bush appointed him. How can we tell Bush that his FCC Appointees/employees are destroying American faith and free market capitalism. Anyone know how to go about that?

[Tyler Savery]

GJelosh197.....

I do not recommend buys or sells. Plain and simple

[SPR]

I was once upon a time a Bush fan, but now I have to say, what makes you think Bush gives a rats ass about what damage his appointees do?

[chicago gary]

im in for friday. does anyone hace fcc tates phone number. lets call her

[163888]

heynow913, Tates is [phone].

disappointed American, Why dont you get off it also moron. I take it you are talking about Martin and it is out of his hands at this point, he has already given his approval. So why dont you point your venom where it should be pointed at the two democrats on the board. My god how dumb are you people. You dont Bitccch and moan about the people that will vote for it. You bitcch and moan to the people that have and are still against it.

[cos10000]

Mr. Savery, self-appointed satellite radio expert, should make it clearer and state explicitly in his reports that he makes no recommendations on stocks.

[chicago gary]

I called Tate just now. The intern said she is traveling now. I left her a message to vote for the sirius/xm merger. Lets flood her office with messages to vote for the merger.

[GJELOSH197]

tyler you have been bullish on these stocks like an imbecile for 2 years and you have cost your readers dearly to the tune of 50%

[chicago gary]

For those of you who are anti Tyler, why bother reading and posting.?Do you not have better things to do then bitch and complain?

Tyler you are awesome. Those who comprehend what you write love you. Those who complain, do not truly comprehend what they are reading. They read into it what they want.

[cos10000]

The Vicar was waxing skeptical about Mr. Savery's bullishness several weeks ago. Why no one listened?

[Tyler Savery]

Vicar.....

You are so bent on casting aspersions that you have opened yourself up to the following criticism:

I have stated time and time again that I am not a "self appointed satellite radio expert" yet for some reason you love to give me that title. I have made it crystal clear, and stated it explicitly, I AM NOT THE EXPERT ON SATELLITE RADIO, yet somehow you still do not comprehend this. Perhaps reading comprehension is the source of some of your problems.

You are seeing something that is not there, and even when you are told point blank that it is not there, you still see it.

I do not know how much more simple this concept can be. I do not recommend buys or sells. Nowhere in my writings will you find me making such recommendations.

GJel.....

I have actually been quite neutral on these stocks for quite some time. I am bullish on SDARS as a concept and a product, but that differs from the equities.

Interestingly, someone sent me this site ( labs.daylife.com/journ... )that seems to pick up my stories and this site categorizes me as "mostly neutral" as you can see on the right hand side. I have no idea how they come to their determination, but I thought it interesting.

[163888]

Tyler, I cant believe it has taken you this long to respond to VicDave, on how low his comprehension skills are.

[monk26]

FCC needs to be renamed to FCS, as in F**k Common Sense.

[Rawbhurt]

IF THIS DEAL DOES NOT GET ANNOUNCED THIS MONTH.FCC IS GOING TO WAIT THE END OF THIS QUATER.BUNCH OF C@CK SUCKERS............

[User 223050]

Disappointed American - although I may have tempered by opinion somewhat, your post is right on the money (pun intended). This "decision" is not rocket science, and has taken far too much of our time and money. This is another attempt by the powerhouses to make certain there is no competition, and then for the government to actually support it (or at least give it serious consideration)..?? This is a slap in the face of America's working people.

[Fed UpAmerican]

WTF
Just another reason to stop paying your taxes. They just go to morons like the FCC.

FED UP AMERICA

[cos1000]

Tyler, I appreciate your reporting on this sector and the FCC happenings in particular. Your pointing out how Davenport is playing the FCC for a very profitable potential spectrum grab, while using his minority status and the FCC's politically correct "affirmative action" concession, is a great point. Unfortunately though rather than discuss this possibility and the veiled intentions of Davenport, and silence of the NAB, we hear more meaningless blaming for poor investment decisions and more Blah, Blah, Blah, from VicDav. Keep up the good work and stay strong against these meaningless attacks.

[cos1000]

gjelosh197.....If you interpreted Tyler as being bullish on these stocks for 2 years, and that was your reason for investing in them, whose the imbecile? Tyler or you....MMMMM let me see...YOU!!!!

[killerkaul]

Cos .....,888..... I get so tired of the wah babies in this attempted merge. Little girls under the age of 4 should not be allowed to post.

[Sirius Fan]

By responding to trolls, you give them the attention they seek.

Food for thought.

[shure46]

I personally grow weary of the " race card " constantly thrown on the table ....usually just a ploy to make a power or money grab .....as soon as the race card hits the table , all common sense , and fairness , leaves the room ...and the bureaucrats shake in their boots .....

[novistor]

It appears as though - Vicar and Gjello need to get their big picture in better focus. Instead of spewing a bunch of B.S. at an intelligent writer, get a grip and publish somthing on this blog that somebody can benefit from.

[shure46]

no one is an imbecile for buying too high ......only for selling too low .

[novistor]

Life is like a bowl of cherries - and waiting for ths stinkin' merger is the pits (or maybe worse).

[GJELOSH197]

tyler if youre 'supposedly neutral' on these stocks, THEN WHY DO YOU WRITE ABOUT THEM INCESSANTLY, ALWAYS NOTING AT THE BOTTOM OF YOUR ARTICLES THAT YOU ARE 'LONG SIRI., LONG XMSR'!? you are an veritable LIAR!!!!!!!!!!!! you dont take account for you inaccuracy and stupidity...why dont you owe up to your readers..HOW MUCH MORE WILL THESE STOCKS HAVE TO FALL AS YOU CONTINUE YOUR 'LONG' POMP THESIS YOU LOW-LIFE!!!!!

[Tyler Savery]

GJEL......

What you are not comprehending is that the "Long SIRI, Long XM" is a statement that I have a position in the equities. It is not a recommendation. I have had a long position in these companies since the recap of SIRI.

Someone who bought at $1.00 and someone who bought at $3.00 can both be LONG. However, their sell points or sentiment could differ dramatically.

LONG is a statement that I have shares in the equity. Nothing more, nothing less. This has been made quite clear some time ago for any of those that did not understand the differences between a statement of position and a recommendation.

A recommendation would be BUY, SELL, HOLD, etc.

The name calling accomplishes very little and does not add to the value of the conversation.

[Plowboy]

Wish in one hand, crap in the other, tell me which gets filled first.
The FCC could care less.

[mudslinger]

shure46....Your 11:52 post shows a dangerous lack of awareness on your part (dangerous to you). And before I go into detail, note that I am also long both siri and xm. While your position MIGHT be true with respect to well-diversified investments in the broad equity markets over a long time horizon, it is certainly NOT TRUE with respect to ANY individual stock over ANY time horizon, much less an investment in these speculative companies. There is a very real possibility that these stocks may never recover their past market caps. Bankruptcy (and therefore a $0 value) is a real possibility (see Bear Stearns, although it was actually bought out on the cheap to prevent bankruptcy)....another possibility is that their stock prices stay roughly where they are now for years...in that case while you "think" you would be avoiding making your loss real your brokerage statement will show you the "real" value of your investments; further, you will probably miss many other/better investment opportunities while you wait which costs you even more money.

Bottom line: The price of a stock when you are considering buying it IS important. Buying too high will hurt you just as much as selling too low. And further, when evaluating the merits of a stock you currently hold, the price that you bought it is IRRELEVANT (except for tax considerations). Either you believe the stock has a high probability of appreciation (and a good risk/reward ratio) or you don't...the price you paid for that stock has NO BEARING on that analysis.

Sorry to be negative, but I think accepting these facts will help you in the long run.

Now...let's get back to waiting on the FCC...I'm sure the vote will come any minute now....yeah right.

[163888]

Tyler, why bother I know of at least 2 other times that you have stated that to ether him or VicDave. I recommend you dont even bother. I would much rather have you use your time on the FCC filings. My god if they cant see how much time you have saved the rest of us, by searching the ends of the earth for all the information that is out on SIRI, then dont bother with them, they are not worth it.

[shure46]

mudslinger .....yes , I understand , and of course it is true if a stock NEVER recovers , then buying too high is also stupid .....and of course it depends on how high we are talking here ......XM @ 10 ???? is "buying too high" , XM @ 30 ???? ( pretty disastrous ) , you can either sell @ 25 and take a slight loss ( which probably would have been a good idea , but who figured it would tank to 6.80 ) or you can wait it out for a long time ....I've got an average of probably XM @ 15 ........probably dumb to try to catch the falling knife , but now I have no choice but to hold and wait ......yes , of course i could have sold it all @ 9 , and bought it back @ 6.80 , but that requires a crystal ball ( and brass balls ) which I don't have !!!!!! hahahha ......so I will wait , and I will not consider myself and "imbecile" unless I sell too low , or XM/Siri goes bankrupt .....neither of which has happened yet ......so buying too high of course is dumb , but selling out to low out of fear , seals the deal ( unless you are lucky enough , or have the vision to see the bottom , and buy it back there ) ......I am sure that XM/SIRI was the greatest thing next to sliced bread here 5 years ago ......but , I definately understand your point mudslinger , and you probably know more than I on this stuff ....I am still learning ( and much from these blogs ...thanks everyone ) .....I am definately learning in the school of hard knocks !!!!!! hahahahaha but if XM/SIRI will double their current prices , I will be close to comfort again .......SIRI @ 5 , and XM @ 16 , and I will be a very happy camper .....I have no choice ....sit and wait .......I really don't feel like risking the ups and downs to make a buck now , so I am just going to hold , and try to play it safe right now

[shure46]

JUST GREAT !!!!!! Oil tries to go down a bit , the stock market tries to have a little rally , and IRAN just has to fire off some damn missles !!!!! Crap !!!!!! Can you idiots stop rattling your sabres long enough for me to make a few bucks please !!!!!!!

[Roxieanne]

Tyler, this has always been about demanding however large part of the spectrum that Georgetown Partners could get for their clients-----in the name of diversity and control.

This has imo been a shakedown of Siri and XM , their customers and stockholders ---- In this shakedown, there are no physical weapons, they just use the government and courts---it's like an ongoing filibuster in Congress with no end in sight.

It's like the child who cries and cries until you acquiesce and give them what they demand.

Do a little corporate research into similar shake downs---Toyota being one of the more notable.

The FCC needs to tell Georgetown and their buddies to take a walk.

[Roxieanne]

An Addendum to that message:

Tyler, have you ever consider sending a link to Seeking Alpha to the FCC----I am not convinced they even begin to understand what the real people who are investors and subscribers to Siri/Xm think about this merger.

20,000,000 subscribers to XM and Siri combined---impressive.