Thursday, September 14, 2006

FCC Chairman Misquoted Regarding Merger Issues

May 14, 2006

This news comes a bit late for trading purposes, but we try to keep you informed.

It would appear that the comments that were reported by the Fly On The Wall via UBS via the Chairman of the FCC were not as previously stated.

Thus.....the FCC Chairman is NOT in hot water.

Here is what was reported earlier"

“the Chairman made it clear that the FCC is not going to allow a merger in Satellite TV or Radio.”

Here is what was said:

Question from Citadel Investments: In a hypothetical transaction in the sat. radio space, would the Commission look at the transaction in the context of strictly the sat. radio space or would it be more broadly defined to include terrestrial radio HD radio, etc?

Answer from FCC Chairman Kevin Martin: The commission hasn’t ended up addressing it. The only thing that I would have that would be analogous to point to, in the DBS context, the commission did analyze the impact of video competition but in the end looked at it more in the satellite context. So that for example when Echostar and DTV tried to merge, the commission rejected that even though there were broadcast television stations and cable in those markets. So while the commission obviously looks at all of them, the analogous thing was looking primarily at a satellite market.

UBS analyst: What would it take for that context to change from the satellite market to a broader look?

FCC Chairman Kevin Martin: I’m not sure off the top of my head. We don’t have any of these issues in front of us or current mergers pending. All I can say is that is how the commission did it most recently – that was in about 2004, I think or 2003. That is why I was saying before (in reference to DBS), there would have to be some significant change in the marketplace or the service offering for us to look at it differently.

What does this mean? Well, the Chairman answered in exactly the way he should have. There has been no statement at all indicating that the merger matter would not be given the consideration of the FCC. Even since the last DIS and Direct television attempt, cell phones, I-pods, etc have gotten into the video business.

Unfortunately for investors in Dish, Direct TV, XM and Sirius, the reporting by Fly On The Wall today dampered some positive momentum in these equities.

9/14/2006 04:11:00 PM

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