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What Might David Rehr's Resignation Mean To Sirius XM?

|Includes: Sirius XM Holdings Inc. (SIRI)

As reported by Satwaves earlier today, David Rehr has resigned as President of the National Association of Broadcasters(NAB). This single act may open the door to several possibilities for both terrestrial radio and Satellite Radio to move forward.

I would venture a guess that Mr. Rehr's resignation is indicative of the way the current Congressional voting on performance royalty acts are lining up. The current bill before the House of Representatives, H.R.4789 and Senate bill S-2500 provide that Terrestrial Radio should provide fair compensation to artists for use of their sound recordings. Mr. Rehr's resignation is no doubt a sign of things to come.

In resigning however, Mr. Rehr may have just jumped in front of the proverbial bullet in this case. Record labels have been more than willing to sit down with the broadcasters to reach an amicable agreement. Mediaweek reports:

Rehr was asked if he would discuss a workable fee schedule with record labels. He responded with certain exuberance: "I'd rather slit my throat than negotiate," he said, stunning fellow panelists.

Through his resignation, Mr. Rehr may be attempting to thwart a vote by Congress on the issue, by allowing the labels and broadcasters to meet at the negotiating table.

This is already something Sirius XM does and as such, terrestrial radio has an unfair advantage over Satellite Radio today. It is likely that any deal reached with the record labels will become an industry standard, which will apply fairly to Satellite radio and Terrestrial Radio equally.

Such a deal would likely put pressure on Internet Radio providers as well and actually forge a newfound partnership as Terrestrial and Satellite Radio pressure lawmakers to apply the same standard to Internet Radio providers such as Pandora.

Position Long SIRI