NAB Testimony - More of The Same

April 19, 2007

The testimony provided by the NAB representative at the hearings this week was basically more of the same. Whether the NAB stance holds water is up to the DOJ and FCC.

TESTIMONY OF RUSS WITHERS
BEFORE SENATE COMMERCE COMMITTEE

WASHINGTON, DC -- NAB Radio Board Vice Chairman Russ Withers, owner of Withers Broadcasting Companies testified today before the Senate Committee on Commerce, Science and Transportation regarding the proposed monopoly merger of XM and Sirius. The following is a transcript of his oral testimony.

* * *

Good morning Chairman Inouye, Vice Chairman Stevens and Members of the Committee. My name is Russ Withers. I am the owner of Withers Broadcasting Companies, which operates 30 local radio stations and six television stations in seven states, including Missouri and West Virginia. I am testifying today on behalf of the National Association of Broadcasters, where I serve as vice chairman of the NAB Radio Board and a member of the Executive Committee.

I am here to voice opposition to the proposed merger of this country's only two nationwide satellite radio companies, XM and Sirius.

Satellite radio is a national radio service that provides hundreds of audio programming channels to listeners across the country. There are only two such services, and they compete against each other in the national marketplace. The undeniable fact is that XM and Sirius want government permission to take two competitive companies and turn them into a monopoly.

When the FCC allocated spectrum to Sirius and XM in 1997, it specifically ruled against a single monopoly provider. The Commission foresaw the dangers of a monopoly. It explicitly licensed more than one provider to ensure "intra-market" competition and to prohibit one satellite radio provider from ever acquiring control of the other. There is no reason to change that position now.

Currently, Sirius and XM occupy 25 megahertz of spectrum allocated by the FCC for nationwide satellite radio service. With a new monopoly and a merged entity, they will continue to control this entire block of spectrum, preventing any new entrant from offering national, satellite radio service and competing against their new monopoly.

These companies have claimed that no one should worry about this monopoly, because local radio competes against XM and Sirius. Let's be very clear on this point: radio broadcasters do not compete in the national market of the satellite radio companies, but XM and Sirius do compete in the local radio markets – markets that I operate in everyday – markets like Cape Girardeau and Sikeston, Missouri.

Local radio stations can only broadcast within their FCC-defined coverage area. Local broadcasters' signals are not nationwide, and are not subscription. The national availability of satellite radio sets it apart from local broadcasters.

Withers Broadcasting operates in small and medium markets like Bridgeport, West Virginia. We are the voice of the community in times of emergency and have a unique connection to our listeners that no other medium provides.

XM and Sirius, by contrast, offer a pre-packaged bundle of national, mobile digital audio channels. KGMO in Missouri delivers outstanding local news, sports and entertainment.

Consumers, however, would never consider my station's local programming a comparable product to Sirius' 133 channels or XM's 170. A local radio station's programming is clearly not a substitute for the array of services offered by XM and Sirius. Services like XM and Sirius compete with each other - and no one else - in the national satellite radio market.

In fact, a recent FCC report and analysis on satellite market conditions shows a very healthy and competitive national, satellite radio market. Following U.S. Department of Justice merger guidelines the FCC defines the market participants as two providers, XM and Sirius. The report also finds the geographic aspect of this market to be national, subscription, and offering nationwide-licensed choices. These are inherently different characteristics and services than that of local radio broadcasters.

I can understand why XM and Sirius would want a monopoly, but that does not mean it is in the public interest. XM and Sirius, by their own admission, are not failing companies. Their current highly leveraged position is due to extraordinary fees paid for marketing and on-air talent, including the $500 million contract that Sirius awarded to Howard Stern and the $83 million dollar bonus paid to him just last year. But even with these costs, XM and Sirius have made clear they can succeed without a merger.

For these reasons and others, local broadcasters strongly oppose a government-sanctioned monopoly for satellite radio.

Thank you.

About NAB
The National Association of Broadcasters is a trade association that advocates on behalf of more than 8,300 free, local radio and television stations and also broadcast networks before Congress, the Federal Communications Commission and the Courts. Information about NAB can be found at www.nab.org.

Labels: merger, nab, sirius, xm

4/19/2007 11:05:00 AM

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Rehr Delivers Keynote Speech At NAB2007 - And Yes, He Mentions The Merger

April 17, 2007

REHR DELIVERS OPENING KEYNOTE ADDRESS AT NAB2007

WASHINGTON, DC -- NAB President and CEO David K. Rehr delivered the opening keynote address at NAB2007 in Las Vegas today. Below is a transcript of his prepared remarks.

Thank you and good morning.

Radio and TV broadcasters and our network partners implicitly understand the power of images.

Radio reporter Herb Morrison covered the explosion of the luxury airship, the Hindenburg when it burst into flames on May 6, 1937, in Lakehurst, New Jersey. His broadcast created a powerful image in the minds of the radio audience. You can hear the compassion and horror in More-is-son's voice. Let's listen.

Television, of course, also gives us powerful and indelible images, like these unforgettable events in history. These are moments we'll never forget.

Today, I want to look beyond the power of images to the power of words — exemplified by these great statesmen.

As we have just heard, words have consequences.

The words that we use in our business also have consequences. These words are critical to how we redefine our issues and our identity as we proceed into our digital future.

And that's what I want to discuss today.

But before I look forward to what we must do in the future, let me give a quick summary of what the NAB has accomplished over the past year.

You can call last year Phase 1.

It was a transition and it was successful.

For one thing, it was a year of listening — for the organization and for me personally. I spent much of the year listening to what you said our strengths are what our challenges are. I listened to your hopes for this business and, frankly, your fears.

I tried to be visible.

I tried to be everywhere, as you can see from this map. And where I couldn't get, other NAB executives went. And no matter where I traveled, I tried to spread the energy and excitement I feel for this business that is reinventing itself.

Last year also marked a transition in our attitude and approach toward advocacy, which is a much more active word than "lobbying." As you may know, the word lobbying comes from those who stood in the lobby of the Willard Hotel in Washington, D.C. in the 19th century, waiting for members of Congress to come see them.

Ladies and gentlemen, today we can't wait. If we simply wait and react, it's often too late. Instead, we have to anticipate.

In the past year we have implemented many changes at NAB to signal to Capitol Hill, the Federal Communications Commission, and others that this organization is going to be more aggressive.

It will be forward-looking. We will lead, not follow.

I asked the NAB staff, "How can we do this better?" I asked many of you the same question. I asked our friends on the Hill. We took a hard-eyed look at our standing in Congress.

As a result, one of the things we did is beef up our government advocacy team with strong, bi-partisan hiring. We are set to do battle. But we can not do it alone.

Over the last year, one of the goals of NAB has been to work more closely with our partners on issues of concern to all broadcasters.

We are working closely with groups like the Television Advertising Bureau, the Radio Advertising Bureau, the HD Alliance and the Radio and Television News Directors Association, among many others.

But most especially, we must have a close working relationship with our network partners. ION Media Networks, Univision Communications, and The Walt Disney Company representatives serve on our Board of Directors. And Preston Padden of the Walt Disney Company serves on our executive committee.

And now the big news:

Today, I am very pleased to announce that NBC has joined our association.

I would like to thank NBC President & CEO Jeff Zucker, Executive Vice President and General Counsel Rick Cotton, and President of NBC's Television Stations and Network Operations, Jay Ireland. Jay is with us today, and Jay, I want to thank you for this commitment. We appreciate your support and confidence, and we look forward to working together on behalf of all broadcasters. Jay, please stand and be recognized.

Yes, last year marked a transition, a first step, a rethinking not only of our brand but of our business. We began working to insure that our branding and our messaging was consistent.

In order to advance our agenda, we want to make sure that everything we do, everything we say – we say and do with an eye toward the Congress. And to help us speak more consistently, more compellingly, more positively, we created a new marketing communications group and a new media relations team. I believe we have our internal house in order for the next phase.

Phase II.

Phase II takes us a step further.

Phase II involves how NAB frames issues, defines words, and defines ourselves. In our businesses we understand the power of images very well. We also understand how to use words that paint the right mental pictures for our audiences. But we must apply that method to ourselves, and how we describe our business.

Words have consequences.

And we need to be more astute choosing the words that describe us and our positions on the issues. We need to choose words that advance our cause — not words that are inherently self-defeating, confusing, defensive, or simply outdated. The words we use, ladies and gentlemen, matter.

Now why, am I making such a big deal of this? Well, do we call the new, high-tech Mercedes S-Class car a horseless carriage? Of course not.

Broadcasting is using the equivalent of horseless carriage language in many ways. We have been using 20th Century language to define ourselves and our positions in a 21st Century world. And frankly, that has to change.

As an industry we need to rebrand over-the-air radio and television broadcasting to reflect the new digital industry that we are creating. A new vocabulary will make our industry and our issues even more understandable to policymakers and the public and more in harmony with the future.

Let me start with an example of success thanks to iBiquity radio.

When iBiquity used the term IBOC-In-Band On-Channel Radio-no one, well, perhaps a few of us, had a clue what it meant. Then iBiquity did something very smart. They changed IBOC to HD Radio. And suddenly a light bulb went on. People got it. Because they already knew what HDTV meant. That changed vocabulary is one reason, I believe, HD Radio is taking off.

iBiquity's change in terminology is an example of how we should all be thinking differently.

But let me give you an example of a television issue where I believe our word choice has put us at a disadvantage.

Multi-casting. Must-carry. What does it all mean?

With the transition to digital, broadcasters will be able to offer multiple streams of programming within their current television broadcast signal. The terms surrounding the issue are terms like "multicasting" and "must carry." When people hear about "multicasting," they assume that the cable companies have to cut their channels to accept ours.

Now we all know that's not true.

This is not a case where the pie is only so big and we want to eat the cable companies' slices. Through the magic of compression technology, we are making the pie bigger by adding extra slices, extra programming. The cable companies intend to strip out our new programming because we're in competition.

This is in effect "stripping."

And even though NAB holds its annual convention in Las Vegas every year, and what happens in Vegas stays in Vegas, let me assure you we are "anti-stripping." That's what's happening. They are ripping out our data, taking our valuable programming away from consumers. We're not asking to take someone else's property or programming. We're simply asking that the cable companies not take ours. We're simply asking that they do not take the anti-competitive step of stripping out our signals.

We have already begun to take this message to Congress and it has been well received.

Another term that works to our disadvantage is "down conversion." Now that sounds like it has something to do with duck feathers. Perhaps converting them to some kind of renewable energy source. But we know that's not what it means.

In the last Congress, draft legislation would've permitted cable operators to down convert or degrade a television broadcaster's high definition signal to a standard one. This would allow cable companies to carry their own channels in full HD while degrading our signals.

Let me describe what is really happening.

Consumers spend thousands of dollars on HD sets. Meanwhile, local broadcasters have already spent billions of dollars on the transition to digital. But what we have here is broadcast discrimination by the cable companies.

It is digital discrimination.

It is HD discrimination

And doesn't calling it discrimination make more sense than "down conversion?" The NAB will work on Capitol Hill to protect the investment of TV viewers and TV broadcasters alike. We will work to prevent the discrimination of high definition broadcast signals.

Then, we have the issue of what unfortunately has been called "performance rights."

Yes, people should be ALLOWED to perform! What good American is against denying rights?

We have civil rights. We have human rights. We have property rights. We have a whole Bill of Rights in the Constitution. But performance rights?

This is not about a right.

It's about a wrong that the record companies are seeking to perpetuate.

Radio has long played the record companies' music at no charge to them, the artist, or the listener... and in return the record labels and the artists have received free promotion of their products.

Free music for free promotion.

This arrangement has been mutually beneficial to radio, the record labels and the artists. Radio airplay continues to be the driving force behind music sales in this country. But now... the record labels want the government to impose a tax on radio stations for playing their artists' music.

Imagine the brazen greed it takes for the record companies to expect us to pay them for the honor of marketing and promoting their artists' music. It would make much more sense for us to charge them for our promotional efforts.

We will advocate that Congress oppose this levy on the market. If successful, it would be a government imposed performance tax. And we will fight it with everything we have.

This next clip is Mel Karmazin, familiar to some of you as the CEO of Sirius satellite radio, testifying before Congress recently. As you will see, he is attempting to define moving from two companies to one company as a merger, not the duopoly to monopoly that it is.

And on this point, Mel and I agree.

This merger will not be approved.

No matter how much Mr. Karmazin and everyone else at Sirius and XM use the word, it is not a merger they seek. It is a monopoly. It is a government sanctioned monopoly.

Now some of you might not be aware I am an economist by training. I ask you, when has a monopoly ever served the interests of the consumer?

In 1997, when the FCC authorized two nationwide satellite radio operators, it specifically prohibited them from merging. The bad business decisions of XM and Sirius -- should not be rewarded with a government bailout in the form of a monopoly.

This certainly would not be in the consumer's benefit.

It will be a huge consumer headache because the companies use two different technologies which are not compatible with each other. Like beta and VHS. No, this is not about the consumer. It is not about advancing technology. It is about lining the pockets of financiers and corporate executives.

A monopoly is a monopoly is a monopoly, and we at NAB will continue to adamantly oppose it.

Ladies and gentlemen, here's the big picture: we need to reframe and rebrand not only those issues but perceptions about the broadcasting business itself.

To be honest, we, at the NAB, don't yet have all the answers.

But I do know that terminology like "free-over-the-air broadcasting" has become a bit clunky and perhaps outdated. I do know that terms like "terrestrial radio" are meaningless at best.

I was up on Capitol Hill recently and one of the hearing witnesses used that very term.

A congressman said, "Terrestrial radio? As opposed to extraterrestrial?" Terrestrial radio sounds like it either involves aliens or is something from a bygone time - which we are not.

Internet radio sounds like the future. Wireless sounds like the future. Digital television sounds like the future. High def sounds like the future. YouTube, Google, iBiquity sound like the future.

What does "free over-the-air broadcasting" sound like? I think you know.

We were wireless before it was hot, but we are captives of the language of decades gone by. The language of our past is confusing and perhaps obsolete. We need to update and clarify. We need to reframe and rebrand.

That is with one exception.

One word that is admittedly old-fashioned, yet continues to have power.

The word is local.

It's a word that policymakers immediately understand and definitely appreciate. In this day when society is homogenized and globalized with international corporations, local broadcasters are the only means to keep people and communities together and informed.

The NAB right now has a team working on finding the best words to define us and take us into the future. This will be a long and continuing effort. But, we need your help. We need your ideas. We need your self-discipline, so that we all speak the same language.

We need you to change the way you think and communicate about your business-in your marketing and in your public affairs efforts.

With the emergence of digital radio and digital TV we have an ideal opportunity to do just that.

As the broadcast business reinvents itself technologically, we must also reinvent our identity. We should draw on the best of the past, and redefine it for the future.

And my pledge to you today is this: the NAB is committed to redefining this business, so that perceptions will match our progress.

Broadcasting is being reborn – and is becoming a new business for a new age with a great future.

Thank you very much.

Labels: hd radio, merger, nab, sirius, xm

4/17/2007 09:07:00 AM

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NAB Lobbys Congress Via New Reports

April 13, 2007

The NAB is on the pace of creating a new report every two weeks it seems. After previous reports and lobbying efforts, this one almost went under the radar, and was not accompanied by as much fanfare as the first reports. Whether this is a change in strategy or not is unknown, but the reports are now available to view.

The first report is the Napoli Report authored by Philip M. Napoli.

Napoli takes stances that by now will be familiar to SSG readers.

He first tries to define the competitive landscape

He then addresses three components of the marketplace....specifically the "Upstream Content Market", The "Downstream Content Market", and the "Audience Market"

In his position, he defines the "Upsteream Content Market" as the buyers of national content such as Sirius and XM. He states that if a merger were allowed that Sirius and XM would have a monopoly and thus the content providers and talent would have less negotiating power. the framework of his statements sound plausible, but they rely on the reader to ignore several key items:

1. National Talent is not exclusive to XM. For the Napoli stance to hold water, readers would have to believe that simulcasting on terrestrial radio does not exist, and talent such as Rush Limbaugh, Michael savage, Sean Hannity, etc. are not broadcast on terrestrial radio.

2. Readers would also have to set aside the fact that many radio groups exist in several markets, and in fact, many act as a "cooperative" by allowing other networks to broadcast a feed of a particular show.

3. The reader also has to virtually ignore what radio is mostly made up of.......music channels. I can assure you that "Let It Be" by the Beatles is the same on terrestrial, I-Pods, internet or satellite.

Napoli then discusses the "Downstream Content Market" where the sellers are providers such ass Sirius and XM, and consumers are the buyers. Napoli wants this segment to carry a narrow definition to support his stance. Her feels that the competitive landscape should be limited to services that are mobile. He also feels that satellite radio differs from other mobile service in many ways, and that these other mobile services are not substitutable, but rather complimentary from satellite radio.

Well, this is interesting. How much is new here. It is obvious by even a casual observer that the method of delivery differs between the various services. It also stands to reason that consumers will utilize more than one type of service or more than one delivery method. This also seems to be the first time that complimentary has been added into the stance by the NAB. It seems that perhaps they are getting a bit closer to the word competition.

Napoli then gets to the "Audience Market" where he calls the audience the advertisers that buy ads on radio. Napoli insinuates that there is very little competition between terrestrial radio and satellite radio on this front. How he arrives at this conclusion is interesting. He states that satellite gets most of it's revenue from subscriptions, and terrestrial gets most of its revenue from advertising dollars. HMMMM.....That is part of the point of satellite radio. Consumers can choose a free service and get advertising, or a subscription service and have less advertising. further, there was a substantial dent in ad revenue for terrestrial radio when Howard Stern left for Sirius. Mel Karmazin has stated that he is working towards ad revenue being 10% of overall revenue. At $1,000,000,000 of revenue, that would mean $100,000,000 from advertising. That is a substantial amount of money, and believe me when I say that both terrestrial and satellite compete every day for ad dollars.

All told, the Napoli report is well written, but once again, it is a document written to support a specific side of the issue. This is obvious as you read through the report. The reader has to ignore many aspects of the sector that we already know exist. The reader has to ignore the $200,000,000 in revenue terrestrial radio collected for the internet side of their business in 2006. The reader has to ignore that there are radio companies that own stations across the country. The reader has to ignore the fact that terrestrial radio carries many shows with a national presence.

The second piece from the NAB this week came in the form of a letter from James C. Miller III. In which he categorizes the proposed merger as a "Two-Down-To-One" situation. Again, this is something that has been floated by the NAB since the beginning, and again, it requires the reader to suspend the belief that terrestrial radio, cell phones, internet radio, and I-Pods are not competing for the ears of the consumer. All one has to do is boil this down to the roots of the issue, and you arrive that all of these types of companies carry a common goal.......Have consumers listen to content provided by their company.

This merger has many facets to consider, and many debates and arguments to hear. In the end, it is the mission of the DOJ and FCC to consider all sides and render a decision. If you are a reader of SSG I highly suggest that you let your opinions be known as well. readers can click on the banner ad to the right and voice their opinion.

Labels: merger, miller, nab, napoli, sirius, xm

4/13/2007 10:14:00 PM

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NAB Wants To Expand Beyond Local

April 9, 2007

The NAB would on one hand would love you to believe that they are not competitors of satellite radio, while on the other hand they are working hard and committing millions towards EXPANDING their reach.

NAB LAUNCHES
TECHNOLOGY ADVOCACY PROGRAM: NAB FASTROAD

WASHINGTON, DC - NAB today announced the formation of a long term technology advocacy program. The overall mission of the program will be to seek and facilitate development and commercialization of new technologies that can be exploited by broadcasters using radio and television broadcast spectrum. The multi-year, multi-million dollar program will be named NAB FASTROAD (Flexible Advanced Services for Television and Radio On All Devices).

NAB FASTROAD is a product of the efforts of NAB's Technology Advocacy Committee in accordance with the sustained priority placed on technology by NAB Joint Board Chairman Bruce Reese and NAB President and CEO David K. Rehr. Consisting of NAB Board members, the NAB Technology Advocacy Committee held its first meeting in March 2006 and subsequently conducted a year-long deliberative decision-making investigation, including briefings by outside consultants, economic and technical analysis of technology developments, and technical review of potential projects through a technology discovery group process. Based on this work, the NAB Board of Directors decided unanimously in January 2007 to launch the program and NAB's Executive Committee approved organizational details in late March.

"As we move into the digital era, the most successful local broadcasters will be those who continue serving the core audience in their local community while aggressively embracing new technologies to expand the reach of their high-value content," said Rehr. "This program will play a key role in the acceleration and adoption of new broadcast technologies and NAB is proud to spearhead its formation."

NAB FASTROAD will be managed overall by a steering committee consisting of NAB executive staff, Board members and other representatives from NAB broadcast member organizations. Project selection and implementation will be handled by a technical committee of selected NAB member company engineers and staff from the NAB Science and Technology Department. Participation by NPR Laboratories and MSTV has also been established to coordinate with other ongoing technical programs in the radio and television broadcasting sectors. The program will principally concentrate on technologies and services related to over-the-air digital transmission.

Labels: competition, nab

4/09/2007 01:25:00 PM

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Carmel Report - The Questions We Have

April 4, 2007

The Carmel Report has now gotten quite a bit of attention. We here at SSG were critical of many points in the report. The reports author, Jimmy Schaeffler, did return our call, and spoke of a willingness to go over the report details. We have put together a list of deeper questions, and have forwarded those to the Carmel Group. When the answers come, we will publish them. The following are the questions that SSG will be asking regarding the report:

1. The Report is Titled, “Higher Prices, Less Content, and a Monopoly: Good For The Consumer?”

A) Do you recognize that Sirius and XM have already promised lower pricing as well as tiered pricing?

B) Do you recognize that subscribers will have access to more content than they previously had?

C) Can you state a monopoly will exist without seeking out and identifying all aspects of the competitive landscape currently and two years from now?

2. The Report’s front page states, “The Proposed Sirius-XM Merger. It’s Harmful Impact On The Consumer, Content Providers And Performing Artists.”

A) Did you look into the benefits to consumers?

B) Did you look into the benefits to content providers?

C) Did you look into benefits to performing artists?

3. You state that presently there is a duopoly in satellite radio and that they are attempting to merge into a monopoly.

A) The statement may be true, but like everything in life it is not that simple. By narrowly defined parameters may consider Sirius and XM a duopoly, and even a monopoly if the merger is approved, but in reality aren’t there many companies in the business of delivering audio content to consumers?

4. You state that if the merger were to be approved that every subscriber would be beholden to one satellite radio company.

A) Every subscriber has plenty of choice. They can obtain audio entertainment from various sources, and many of them do not require a fee. In fact, looking at the take rate in the OEM channel, roughly half of the consumers decide to NOT CONTINUE the service. Aren’t these consumers exercising their choice?

5. You state that if this merger were allowed that it would result in less service.

A) How do you come to this conclusion?

B) Do you recognize that a current subscriber to one service would now have access to programming from the other service?

6. You state that if the merger were approved that there would be less affordability.

A) Do you recognize that Sirius and XM have promised a lower priced package?

B) Do you recognize that they have spoken of a price freeze?

C) Do you recognize that the costs would be less than if a consumer had to subscribe to both services?

7. You state that if the merger were approved that there would be less diversity.

A) How do you arrive at this conclusion?

B) Does it not stand to reason that with the removal of duplicitous programming that there would be room to increase channel diversity?

8. You state that if the merger were approved that consumers would have less choice in content.

A) Again, with the removal of duplicitous programming, would it not stand to reason that there will be more variety?

9. You state that if the merger were approved that there would be less choice in hardware.

A) Is there anything to substantiate that opinion?

B) Do you recognize that there are many companies that deliver hardware that is capable of delivering audio entertainment?

C) I-Pods control a massive chunk of the MP3 market. Do they stop developing hardware?

10. You state that overall opposition to the merger is significant and growing.

A) Do you offer any data to support this statement?

B) What is your definition of significant?

11. You state that the idea that AM, FM, HD, I-Pods, Cell phones, and internet radio are competition for satellite radio is ludicrous and could not be further from the truth.

A) In previous reports issued by you, you stated that these were all indeed forms of competition for satellite radio. How do you defend being on both sides of this issue?

B) Does AM Radio compete for advertising dollars with satellite radio?

C) Does FM radio compete for advertising dollars with satellite radio? Does HD Radio compete for advertising dollars with satellite radio?

D) Does terrestrial radio carry ads from identical sponsors that are heard on satellite radio?

E) Does terrestrial radio compete for the ears of consumers?

F) Do cell phone companies compete for the ears of consumers?

G) Does Internet radio compete for the ears of consumers?

H) Do I-Pods and MP3 Players compete for the ears of consumers?

12. You state that AM and FM Broadcasters do not compete in a national market against national satellite radio broadcasters.

A) Were you aware that AM and FM radio broadcast their content on the internet, and that this content is not limited to a local area, but is in fact not only national, but global?

B) Do AM and FM radio compete for the same advertising dollars as satellite radio?

C) Do you recognize that AM and FM station owners syndicate programming for distribution on a wide scale that covers many markets?

D) Do you recognize that shows such as Michael savage, and Sean Hannity are national talent that terrestrial radio broadcasts in many markets?

13. You state that true measure of competition must look at services that can substitute for satellite radio as of March 2007.

A) If satellite radio were to not exist, do you think that subscribers would not listen to audio content?

B) Do you recognize that roughly half of the OEM consumers do not elect to keep satellite radio after they receive a free trial of the service? Is this not a clear and demonstrated fact that shows that consumers do feel they have an adequate substitute?

14. You state that I-Pods and MP3 Players are not substitutes for satellite radio.

A) Consumers that use I-Pods and MP3 players seek out the content they want to hear, and organize it in such a way that they desire. Was not JACK FM a concept that advertised that it “was like your I-Pod on shuffle”? Does not Sirius have a channel called “Super Shuffle”?

B) Do you recognize that if someone is listening to an I-Pod that they are not at the same time listening to satellite radio or terrestrial radio, or internet radio?

C) Do you recognize that many AM and FM radio stations offer podcasts to their listeners via the internet, and that consumers can down-load this content to their device? Please pull up some terrestrial radio station websites and see for yourself.

D) Do you recognize that both Sirius and XM sell products that are capable of storing, organizing, and playing content in much the same way that an I-Pod or MP3 player functions?

E) Do you recognize that these devices from Sirius and XM allow you to mark a song that you hear for later download?

15. You state that ell phones and internet radio are rarely offered in vehicles and therefore are not a substitute.

A) This may sound foolish, but don’t you bring your cell phone with you in your car?

B) Most people spend more time in their home and office than they do in their car. Internet radio is a viable medium in those locations. In fact, terrestrial radio as well as satellite radio, offer internet feeds of their content. Do you recognize this?

16. You state that Sirius and XM have not acted in a competitive manner towards Cell phones, Internet Radio, or MP3 players.

A) Do you recognize that the portable devices offered by Sirius and XM do indeed compete with MP3 Players?

B) Do you recognize that Sirius and XM have tried to work with cell carriers to deliver content, and that many carriers develop other deals instead of satellite radio?

C) Do you recognize that Sirius and XM offer service on the internet in an effort to compete in that sector, as do terrestrial radio?

D) Would you argue that terrestrial radio owners do not use internet listener-ship as a factor when selling advertising? I called a few stations, and indeed they offer that their service is on internet radio as a selling point. Do you think that Sirius and XM are not doing the same?

17. You state that Sirius and XM have big installations in the OEM market.

A) If Sirius and XM have big installations, are the installations of AM and FM radios Gigantimungous? What about CD installations?

B) Do you recognize that OEM’s are increasingly installing Aux Inputs? Do you recognize that these inputs are often termed as I-Pod ready?

C) Do you recognize that satellite radio is paying for these installations whereas AM and FM do not?

18. Your report contained an Action-Reaction chart to illustrate competition. Did you consider expanding that Action-Reaction chart into the other markets?

NAB reaction to the introduction of the cell phone was to oppose it being used in cars.

NAB reaction to satellite radio was to oppose the service

NAB reaction to the use of repeaters was to oppose them

NAB reaction to satellite radio was to oppose them providing local content

NAB reaction to satellite offering traffic and weather was to oppose it

FM radios reaction to I-Pod was to create JACK FM

FM radios reaction to Stern leaving was to create FREE FM, and in fact, they spoke directly about the fact that it was free.

NAB is at this point arguing before the FCC to make ownership requirements less restrictive allowing consolidation within their ranks.

NAB is at this point lobbying against Low Power FM

The success of the Inno and Stiletto has led directly to Slacker developing a product that they term as satellite radio. It will launch this summer.

NAB reaction to commercial free music is to cut the number of ads

Google “NAB and Opposition” and you will be amazed at how many hits there are.

Terrestrial radios reaction to satellite HD Radio. They are now being installed in cars, and wal mart is now selling them.

Cell carriers now offer 1 year unlimited downloads with Napster.

The competition is fierce, and comes from many directions. These companies compete for listeners and advertising dollars. Some entities in this group (NAB membership) have the benefit of not having to pay for music royalties as well as a lock on “local” content.

The Carmel report was published, and it got a lot of press. These are compelling questions that arise when the issues are explored more deeply. Thank you for taking the time to return my call, and for agreeing to discuss the report. I look forward to seeing your reply.

SSG

Labels: carmel report, merger, nab, sirius, xm

4/04/2007 11:17:00 PM

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Rehr Makes Some Interesting Comments

April 4, 2007

Below are statements made by David Rehr in October of 2006. This statement is available on the NAB website HERE We have bolded what we feel are the most interesting items. Seems Rehrs definition of the competive marketplace changes like the wind. Seems he lists out a lot of competitors.......likely he will once again claim that it is one way competition.

“The Future of Broadcasting”
The National Press Club – October 4, 2006
Remarks of David Rehr, President and CEO, National Association of Broadcasters

Ten months ago, when I took this position at the NAB, I knew that joining the broadcasting industry would be exciting. But after seeing the dynamics of this business first hand, it is 20 times more exciting than I could have ever imagined.

One surprising thing I’ve learned is that most Americans are unaware of the dramatic changes taking place in our industry. And they are also unaware of the strength of broadcast radio and television among all media. Of course, part of this lack of attention to the changes in broadcasting is by industry choice. After all, it is the broadcasters’ fundamental job…

To make the audio and visual experience paramount;

To provide the best local news and sports, entertainment and music;

To offer outstanding network and syndicated programs;

And, to serve as a lifeline – often the only one – in times of peril.

This is at the core of being a broadcaster.

But with all the changes taking place around us in a fast-paced world, broadcasters must do a better job of showing the amazing transformation we are undergoing. You might say that we have inadvertently relinquished some of the excitement occurring in broadcasting to our competitors, by not being more proactive. That ends today, because we have a very compelling story to tell.

Broadcasting is a vibrant business. It is a business that embraces the future. We are switching from analog to digital technology, a literal “reinvention.” Digital technology offers broadcasters unlimited new ways to serve their audiences, along with grander picture and sound quality. This technological change, which fuels our future success, has also brought us an exploding number of new competitors. And we must chart new courses.

But, these new media competitors, if given the choice, would prefer to be in our position.

That is because, by any measure, broadcast remains the undisputed leader in news and entertainment – by far. And, as we look to the future, our competitors do not have the history, business cultures or experience to provide true localism – events, news, weather – the local link that has built the broadcast industry.

Today, my goal is to begin the dialogue on areas where broadcasters have enormous opportunities. We need to re-engage those who have a false perception of the broadcast industry and begin to correct it. I would like to focus on three areas that demonstrate the vibrancy, strength and reach of broadcast:

Number one – broadcasters are seizing new opportunities in digital media;
Number two – broadcasters are reasserting our unparalleled leadership as the media of choice;
And number three – broadcasters are leveraging our unique advantage of localism – enhancing community life and encouraging responsibility.

First – We are seizing opportunities in digital media. Going digital is spawning amazing new tools and business models for networks and local stations. Today, over 1,600 television stations are broadcasting in digital and high-definition (HDTV). Standard digital programming offers dramatically improved picture quality over analog TV. High definition is the highest quality viewing experience available. The majority of broadcast prime time scripted programs, major sports and entertainment are now delivered in HD. And it’s important to know that viewers with digital television sets, who rely on over-the-air broadcasting, receive a more pristine picture than cable or satellite provide. Anyone who has seen a golf tournament or a football game in high definition knows exactly what I’m talking about.

People get HD! They get it when they can see the individual blades of grass and even the logo on the golf ball.

But, the greatest potential of digital television is the ability to provide multiple streams of programming, which bring increased choices to viewers. With our advanced technology, digital stations can broadcast up to six different programs at once. And all of these program streams together take the same bandwidth required for just one current analog program. This offers a phenomenal opportunity to increase diversity of content and localism.

Some stations refer to their multiple program streams as “hyper local.” They broadcast local college and high school sports, gavel-to-gavel city council meetings, instantaneous local weather and other local programs. One of the first to go “hyper local” was KTVB in Boise, Idaho.

But this expanded content and localism, tied to our new technology, has not come about without a cost. To go digital, TV stations have invested anywhere from around one million in small markets to over 20 million dollars in large markets. What many people don’t appreciate is that during the DTV transition, broadcasters are literally paying to operate two stations – one in analog, and one in digital. For many stations, this has been a huge financial challenge, without offsetting revenue.

Congress has mandated February ­18, 2009, as the date when television broadcasters will go fully digital, and return the analog spectrum to the federal government. But most Americans are not aware of this transition. One of the unintended consequences of the transition is the potential for 73 million analog television sets, currently in use, to stop working in February 2009. The federal government has recognized this challenge and is working with us to help solve the problem.

An important step in ensuring that no set goes dark took place just last week. NAB joined in an unprecedented collaboration with the Consumer Electronics Association (CEA) and the Association for Maximum Service Television (MSTV). Together we submitted a plan to the National Telecommunications and Information Administration regarding the initiative to protect consumers from losing access to television. Key to this effort is a program to provide digital-to-analog converter set top boxes to viewers. CEA President and CEO Gary Shapiro, and MSTV President David Donovan, deserve enormous credit for bringing the parties together to seek a common solution, so that no television set stops working.

The NAB Television Board has made it a top priority to undertake an aggressive marketing campaign to explain the benefits of DTV and the digital transition to the American public.

In the weeks and months ahead, we will roll out the specifics behind this concerted effort. And we will need your help. We have only 865 days left until the conversion occurs.

Radio is also undergoing its own digital transformation – “HD Radio.” A layman’s explanation of HD radio is as follows: HD radio brings FM quality to AM and CD quality to FM.

And HD Radio brings expanded program offerings – and less interference. More than 1,000 HD radio stations are already on the air, available to 75 percent of the population. Thousands more will be going digital soon. Like their digital television counterparts, HD radio broadcasters can also offer multiple program streams. More than 350 stations are doing just that – rolling out additional channels with new music formats, local information and local creative content.

By the end of the month, there will be 21 models of HD Radios available for consumer purchase from 14 different manufacturer brands. More digital radio products are coming to market before the end of the year. We at the NAB are working to accelerate the number of HD receivers in the marketplace, to increase the diffusion of this technology throughout the nation. In fact, it is a top priority of the NAB Radio Board of Directors to make this amazing technology commonplace.

Another benefit of digital technology is our ability to move content from one platform to multi-platform distribution – to expand our reach. Multi-platform generally means broadcast programs delivered on something other than the TV set or the radio. Not at the expense of our core business – but in addition to all that we do.

What makes multi-platform strategies attractive is having more convenient access to our audiences – such as radio on cell phones, and TV on laptops. We hear a lot about expanding to multi-platform at the TV network level and at broadcast stations in large markets. The networks take seriously the need to maximize the platforms available for viewers, so everyone can experience outstanding network programming. And they are creating much excitement across the entire media spectrum.

And in case anyone is wondering how the broadcast networks are doing in the new season, I will quote this week's "Advertising Age" magazine. "Broadcast TV is alive and kicking harder than it has in years. Audiences have shown up in droves for the fall season."

One reason for additional optimism is that small stations are also embracing multi-platform. This was confirmed by an NAB survey just last month. We surveyed stations from the smallest market in the country – number 210 in Glendive, Montana – with 3,980 TV households, up to the number 70 TV market – Tucson, Arizona – with 433,000 TV households.

Here’s what we learned:

72 percent are streaming video on their Web sites,
36 percent are sending text messaging to mobile phones,
And 88 percent sell advertising on their web sites.
Radio is also pursuing multi-platforms. More than 8,000 radio stations have Web sites, and many of these are being used as portals to stream their stations' audio. Radio stations earned more than $200 million dollars in revenues last year from online offerings alone.

But even with all of these expanded business opportunities, we must address new competitors.

Who are the newer competitors? On the television side, in addition to cable and satellite and the Internet, we now have Video on Demand, interactive TV, time-shifting, place-shifting, and much more. On the radio side, we have satellite radio, Internet radio, iPODs, other MP3 players, cell phones and others. How will we compete?

Our vision is a broadcast signal on all of these platforms, and on any gadgets yet to be invented. Broadcast signals will not only enhance the experience for the viewer or listener – they will also give the manufacturers that include us an advantage over competitors who do not.

This is already happening in radio. Motorola's I-Radio is merging the cell phone, the car radio and the MP3 player. FM adaptors for iPods are in the marketplace. It is no accident that Microsoft has included an FM tuner in its just-launched portable media player “Zune.”

Broadcast signals on all devices. That’s our future.

We also need more distribution of broadcast signals. For example, telephone companies should be allowed to compete fairly with cable in offering video services. Another competitor to cable and satellite will give consumers more choices. It will give them better prices. It will also give consumers better programming options, especially those broadcast multi-stream programs I mentioned earlier, which cable companies often choose not to carry.

So as you can see, broadcasters are rapidly seizing new opportunities in digital media. I’ve mentioned just a few. It is our future.

My second point today – broadcasters are reasserting our unparalleled leadership as the media of choice. Since the inception of radio and television, there has been fragmentation of viewer and listenership. This is a natural consequence of a vibrant business and has affected literally every industry in America. But as we’ve moved forward, we have allowed our competitors to create a false impression that they are more competitive with us and have a larger presence before the public than they really do. This misconception affects our ability to attract investment, ad dollars, personnel and create momentum in the market place. We are obligated to set the record straight.

First, let’s look at TV viewership.

If I asked you, “In the 2005 – 2006 TV season, where in the top 300 most watched programs would your favorite cable show rank? What would your answer be?

Well, for starters, broadcasters had the top 235 highest rated programs among all TV households. Cable's most-watched show was number 236. It was on ESPN.

In the critical 18 – 49 age demographic, broadcast grabbed 100 of the top 100 programs. We took the next 84 as well. In fact, in this important demographic, broadcast was responsible for 512 of the top 522 programs for 2005-2006.

So, what about specific cable shows? Where do they rank? According to the latest Nielsen figures:
Emmy award winning cable show “Monk” came in at 1,022.

Nip/Tuck came in at 1,403.

And Larry King Live ranks 1,883 on the most watched list.

I think you see my point.

What about local news? Let’s look at a typical American mid-sized city to compare cable news viewer-ship versus local broadcast affiliate news. In Spokane, Washington, in May, in the 25-54 age demographic, the combined viewer-ship for five Comcast Spokane cable newscasts available at 6 pm was 994 people. That’s a total of 994 Comcast subscribers watching CNBC, CNN, Fox News Channel, Headline News and MSNBC.

This compares with a viewership – in the same demographic – of 38,500 for the three local broadcast newscasts at 6 pm. Let me repeat: 38,500. That’s not even close. This is a good example of the value proposition of local news. We work hard every day for our audience, and the numbers bear this out.

And what about the misperceptions about radio? You hear much about satellite radio, XM and Sirius. The satellite radio companies have done a good job in creating excitement for their product and keeping Wall Street interested. But let’s look at the facts. Satellite radio says it has at most 12 million subscribers. By contrast, 260 million people listened to local radio last week. This is week in and week out. And we have recently learned that upwards of 500,000 of satellite radio’s so-called subscriber count are in empty cars that sit in dealer parking lots. In fact, the Securities and Exchange Commission is looking into how these subscriber numbers are counted.

But what about radio’s strength?

An Omnitel/American Media Services study released in August shows local radio’s continued impact:

21 percent listen to local radio more than they did five years ago;
Another 51 percent listen to about the same;
And 63 percent rate local radio as their primary source to learn about new music –20 points ahead of its nearest competitor, which is a category called "talking with friends."
I could go on and on with the facts. The bottom line is that broadcast television and radio are the overwhelming media of choice. And we need to continue to reassert that reality in people’s minds.

Three – Broadcasters are leveraging our unique advantage of localism – enhancing community life, and encouraging responsibility.By localism, we mean broadcasters are the integral part of our communities, promoting local causes, raising funds for charities and providing vital emergency information.

How many of you would turn first to a cable or satellite TV channel or satellite radio when a tornado, a wildfire or a flood is approaching your community? When you need information on school closings or Amber alerts, where do you turn first? The answer is and remains broadcasters.
And as you know, when the power goes out, the only connection you have is a battery operated broadcast radio or TV.

If you were in charge of the Race for The Cure for breast cancer in your community, who would you call first to maximize your visibility? Would you ask your cable or satellite company to sponsor the event, get the word out and send volunteers to work? Probably not. If there is a blood drive, coat drive or a need for volunteers down at the local boys and girls club, it’s the same thing – it is the local broadcasters who will take care of it. Local radio and television have always done these things for our communities. And it will continue to be our fundamental strength.

The NAB announced in June that in 2005, broadcast stations generated $10.3 billion dollars worth of public service in air time and local station contributions to worthy causes all across the nation. Many of our activities are not included in this $10.3 billion – such as the value of hundreds of hours of volunteer time given to local communities by station personnel. This commitment to communities cannot be replicated by our competitors.

We are also using our unique ability to connect locally to help parents work through the everyday life decisions of what their children should see and hear in the media. Broadcasters are taking a leading role in empowering parents to control what comes into their homes through television.

We have joined with all parts of America’s media – the broadcast networks, the cable industry, direct broadcast satellite companies, the movie industry, the consumer electronic manufacturers and others in what will be a $300 million dollar Ad Council campaign to reach every home in America.

The campaign has already been launched and has received strong positive reaction. It is the brainchild of one of our guests here today, my friend, Jack Valenti. Jack has led this unprecedented effort because he, other media leaders and broadcasters believe that parents have the total power right now to control what comes into their homes. It is parents, not government, who should decide what is appropriate for their children to watch. But we are obligated to give parents the tools they need.

The Ad Council has provided public service announcements and a new Web site, TheTVBoss.org, to our broadcasters to help parents block unwanted programming from whatever the source. TheTV Boss.org has already had more than a quarter million visitors. This will be an 18-month campaign to educate parents. Some of you might have seen the first wave of these announcements already.

Broadcasters have embraced this effort wholeheartedly …. running the public service announcements, featuring the campaign in local news, on morning shows, and linking the effort to their station Web sites. Our goal is to ensure every home in America has the opportunity to take advantage of this joint effort.

Let me conclude by talking about the specific role of NAB in moving the broadcast industry forward. As anyone in Washington knows, the best new business models of any industry can be stopped cold by wrong legislation or regulation. That is why NAB is taking stronger steps to ensure a regulatory climate in which radio and television can grow our business and better serve consumers.

Managing change and taking risks will not be easy as we move forward. Working out the copyright, technology and business models will take hard work and cooperation. It will take a concerted effort to update our laws and regulations to ensure that free, over-the-air broadcasting can continue to provide our great service to millions of Americans.

We are seizing the digital future.

We are reasserting our strength as the unparalleled media of choice.

And we are leveraging our localism to advance communities all across America.

And that is why the future of broadcasting is 20 times more exciting than anyone could imagine.

Labels: competition, david rehr, merger, nab

4/04/2007 10:57:00 PM

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Carmel Group Does Not Look Very Hard

April 3, 2007

The Carmel Group has issued a study sponsored by the NAB. In that report they state the following:

The report's author, Carmel Group Chairman Jimmy Schaeffler, focuses much of the analysis on debunking the most generally acceptable argument put forth by Sirius and XM in favor of a merger - that the competitive marketplace includes terrestrial radio, MP3s, Internet radio and music-enabled cellphones.

Schaeffler notes that while those services may become competitors to Sirius-XM in the future, not one of them is "substitutable" for satellite radio today.

"[We are] hard-pressed to find any instance where Sirius and/or XM acted in a competitive manner against [these] so-called digital competitors," claims the report.

Perhaps they forgot this one..........and that's just one such ad. Stay tuned for more on this new NAB sponsored report

Labels: carmel group, merger, nab, sirius, xm

4/03/2007 08:29:00 AM

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Comments on Criterion Report Part 3

March 29, 2006

Comments on the study conducted by Criterion Economics against the merger.

SSG is looking over the study conducted by Criterion Economics and commenting on various aspects of the study. Bear in mind that we are not professional economists, but we can offer insight and opinion that we feel the author of the report has overlooked. This analysis will happen over a series of articles.

Article series links below:

Article #1 - Comments on The Criterion Report

Article #2 - CS3R and NAB

This segment concentrates on the comparison to the satellite television merger that was attempted and failed in 2002. SSG Comments in RED

The author of the report states:

"The merger proponents suggest implausibly that this merger bears no resemblance to the proposed DBS merger that was abandoned in the face of FCC skepticism in 2002. But similarities are striking, and they have been detected by many respected industry observers. In the proposed DBS merger, most MVPD customers would have experienced a reduction in the number of suppliers from three (the incumbent cable operator, Direct TV, and Echostar), to two, and five million DBS customers in areas not passed by cable television systems would have experienced a reduction in the number of suppliers from two to one. Assuming generously that terrestrial radio serves the same role of the incumbent cable operator here, most radio customers would experience a reduction in the number radio suppliers from two to one, and those 22 million age 12 and over who receive 5 or fewer stations would experience a reduction in the number of radio suppliers from two to one. For the same reason that the FCC was skeptical of the proposed satellite television merger, the proposed satellite radio merger should be rejected."

Interesting thesis, but lacking in very real terms:

1. Radio stations can not be compared to cable operators. Cable operators are the sole source of cable television and the cable company collects all of the revenue associated with cable subscribers. To insinuate that the many radio stations in a market are collectively a single entity is very very very very wrong. Terrestrial radio stations compete aggressively with each other and other media on a day in and day out basis. Have you ever seen the ratings books????? Pick any town in the U.S with a single cable operator and tell me what their share is of the cable market.......That's right 100%. Radio stations do not have that luxury.

2. The assertion that 5 million customers in ares without cable would have been relegated to one choice is correct, but lets put that in realistic terms. those 5 million customers represent less than 5% of the population of this country.

3. How is it in one statement the author can go from lumping all radio stations together as a single entity to then speaking about markets with 5 or fewer stations? For the purposes of your argument are they lumped together or separate???? Pick a stance and stick to it. This statement seems like it is likely a Direct quote from David Rehr of the NAB. He is good at flip-flopping.

Sorry Mr. Sidak, but you seem to be trying to compare apples to oranges. And, if anyone takes the time to read your footnotes, the supporting argument for the comparisons of these mergers does not reflect at all the sentiment you state in the paragraph above

Labels: c3sr, criterion economics, nab

3/29/2007 08:56:00 PM

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C3SR and The NAB

March 29, 2007

The Consumer Coalition for Competition in satellite Radio, C3SR, is a consumer group that is lobbying against the Sirius and XM merger. They have taken a stance that the merger is bad rather than a stance, such as Public Knowledge that could use their influence to shape the merger into a company with the desired impacts for the consumer.

The NAB has lobbied against the merger from the start, and in our opinion has demonstrated a very shallow argument.

It appears that the NAB is the dollars behind C3SR.

The Criterion Economics study issued to the FCC and DOJ, and authored by J. Gregory Sidak has an interesting note:

"The Consumer Coalition for Competition in Satellite Radio is a consumer group of Sirius and XM subscribers. It is supported by the National association of Broadcasters."

So, is C3SR doing the bidding of consumers, or the bidding of the National Association of Broadcasters?

What is C3SR's position on the consolidation in terrestrial radio that the NAB is seeking?

Sidak, as indicated in this report is regularly in the employ of the NAB. Why is it that the C3SR sponsored this report rather than the NAB?

Did the money that paid for this report come from the NAB?

How many members does C3SR have? To date, information on the C3SR site has been sparse, and there does not seem to be much in way of participation from individuals.

With the release of this report, there now seems to be more questions than answers surrounding the relationship between C3SR and the NAB

Labels: c3sr, merger, nab

3/29/2007 06:20:00 PM

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What The NAB Would Like You to Believe

March 20, 2007

The NAB seems to have this idea about competition that requires technological advances that until now have only been found in Star trek.

According to the NAB,

"Satellite radio Competes with us locally, but we do not compete with them nationally"

Now, I travel a good deal of miles each year, but i have yet to find myself in Boston at the same moment I am in Seattle. I, and every other human being can only be in one place at one time. That means that I, and everyone else is in a local market 100% of our lives.

Simply stated Mr. Rehr........

I am in Boston. I could care less what is playing on radios in Detroit, Green Bay, Tampa bay, or Seattle. I am in a local market and I have a desire to hear the content I want to hear, be it a CD, a tape, an I-Pod, AM radio, FM radio, Internet radio, content on my cell phone, or satellite radio. While I am in my "local market", I will tune into the service or device that offers the content I want. Plain and simple.

Further, if I leave the Boston market, and go to Tampa, am I getting "local content" that means anything to me? Or am i getting someone else's version of local content in Tampa, that does not impact me? Could you please develop a method by which I can be in Tampa and receive "local content" of Boston??????

Whats that you say.......I can catch my Boston stations on the internet!!!!! Well my oh my!!!! You mean to tell me that I can really be in Tampa and get "Local content" from Boston???? Are you sure, because I could swear that I heard you and a few others state before congressmen and senators that you don't compete on a national level.

Let me check this out:

- Wow, WBCN -104.1 FM - streaming on line!!!! complete with Opie and Anthony. Funny, I think I have heard those guys in other markets. Come to think of it, there is a guy name Imus and a guy named Limbaugh that I seem to pick up in many markets. HMMMMM.

- WEEI 850 AM and 103.7FM - wow, they stream on the net as well. Certainly this is not my imagination. Do you mean to tell me Mr. Rehr that I can get Red Sox, Patriots, Bruins and Celtics talk anywhere I am?????? Impressive.

- WBNW 1120 AM - Business radio Boston style.....and i can get it anywhere in the country.....even globally!!!!!

- WBOS 92.9 FM - Certainly the list of "local content" providers streaming content over the web must be short. Otherwise you would have never insinuated that you do not compete on a national scale. There can't be more that are doing this can there?

- WBUR 90.9 FM - Boston University Radio. Wow, even parents who send their pride and joy to Boston from Indiana can keep up with Boston happenings.

- WBZ 1030 AM - A Boston staple.....and I can get it on the net. Check it out, there is a story on the website about George Bush. Is he in Boston.....Nope......just WBZ covering a national story and putting it front and center on their web page. Well, at least I can get my "Traffic on The Three's" report while I am in Dallas Texas.

Mr. Rehr......need I go on? There are many more examples in Boston alone that I could cite. Need I go into other markets and demonstrate that the NAB membership is indeed broadcasting on a national basis?

Mr. Rher.....Do you think that the Congressmen, Senators, the Department of Justice, the FCC, and most importantly the American citizens are stupid? Do you think that none of these people will point out that terrestrial radio is more than just local radio? Do you think that the song "'More Than A Feeling" by Boston differs depending on where someone is? The band is named Boston, but I can assure you that their music was listened to everywhere.

You expect us to believe your rhetoric???????

Why don't you get back to us after the next Payola scandal.

Labels: competition, local radio, merger, nab, national radio

3/20/2007 10:02:00 PM

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NAB's Paid For Report Has A Major Flaw

March 17, 2007

The NAB commissioned Meintel, Sgrignoli, and Wallace, a Maryland firm to do a study on the interoperability of satellite radio.

The study is interesting, but is full of ASSUMPTIONS, and LACKS DETAIL in specific areas from which conclusions are drawn.

The study totally ignores the overlay modulation techniques currently in operation for Sirius, and in development for XM. Overlay modulation is likely to produce a 25% efficiency in the systems of each provider. Additionally, the study misses the techniques of statistical multiplexing which is a fluid method for bandwidth efficiencies. It barely breaches the idea that bandwidth is not a stable and static figure for channels.

How these major factors can be missed in such a study leaves one to wonder about whether the study was rushed, misguided, or simply done to create a desired outcome from the entity commissioning the study (the NAB).

One particular shortcoming can be found in this statement:

"These various bitrates may change dynamically based upon the program content and the need for additional bandwidth for various programs. Thus in order to allocate enough bandwidth to offer the combined services of 291 program channels, the audio bitrate would need to be significantly reduced."

Please forgive me for being frank here.......There is not a person in this nation that thinks that it is a good idea to offer 2 fox news', 2 cnn's, two espn's, two classic rock stations, 2 CNBC's, etc.......Anyone who researched this issue for 10 minutes would have to be a complete moron to assume that the combined service is going to come out of the box offering 291 channels.

To compound matters, this report insinuates that an interoperable unit has not been developed. Sirius and XM have both stated in very public forums that they have indeed developed such a receiver. And, for the record, who is the NAB or MSW to define the "spirit" of the FCC regulation?????

We here at SSG placed a call into MSW and left a voice mail. As of yet we have not heard back from the firm that issued the report.

Labels: merger, nab, sirius, xm

3/19/2007 02:57:00 PM

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NAB Now Thinks They Know The Satellite Business

March 19, 2007

Oh My!!!!!

The NAB now cites a study that says that the merged satellite radio companies would not be able to offer more programming!!!!

From The NAB: SSG Comments in RED

WASHINGTON, DC -

A proposed merger between XM and Sirius would not allow existing satellite radio customers to have access to more programs than they have now without buying a new satellite radio, according to a NAB-commissioned study prepared by the consulting engineering firm of Meintel, Sgrignoli & Wallace (MSW).

So this survey was paid for by who?????? Oh Yea....the NAB. I wonder what the results will show.

An article in today's The Washington Post ("Radio Deal Could Face Technical Difficulties") also highlights many of the technical challenges to be faced by the satellite radio companies who, according to industry experts cited in the article, are "straining their systems' transmission capacities even before they try to add each other's content."

Did you know that there is something called Modulation Overlay, or Hierarchical Modulation (HM)???? Did you know that Sirius implemented it in the fall????? Did you know XM will also be getting something similar up and running?????

Released today, the MSW study emphasizes the significant technical differences between the two satellite systems, which prevent Sirius radios from receiving programming from XM satellites, and vice versa. In addition, the study shows that the two satellite systems cannot be expanded to fit in more channels beyond their current level without incurring loss of audio quality. Some of the specific facts highlighted in the study include:

MSW.....did you look at the specs of the systems? Do you understand HM? Do you understand statistical multiplexing?

• The bandwidths, bit rates, data structures, and digital audio coding algorithms of these two systems are completely different, making it impossible for existing, dedicated XM and Sirius transmission and reception equipment to interoperate;

True, they are not talking about interoperability with existing equipment.

• The data capacities of both the XM and Sirius systems are filled with programming and significant spare capacity is not available. Expanding the number of program offerings on either the XM or Sirius platforms through more aggressive digital compression would result in degradation of audio quality unacceptable to consumers;

Can you please cite your statistics, or are you simply making an assumption???? Oh, and I must ask again......did you consider HM?????

• Taking a program channel from one system and adding it to the other would likely require incumbent program channels to be removed on a one-for-one basis to make room for the new program channels.

Look at the duplicity....69 music channels, duplicitous news channels, duplicitous sports channels. The statement that a channel would "likely" need to be removed does not seem like you are very sure of your opinion here.

The report also notes that, as a condition of their original license, the satellite radio operators were required to deliver designs for interoperable radios. As of today, no radio that is interoperable between both systems has ever been made commercially available.

So, I think you would agree that they have indeed designed an interoperable radio. Now, if you could be so kind as to point out where the FCC required that it be commercially available I would be most appreciative.

To read the complete MSW report, click here.
About NABThe National Association of Broadcasters is a trade association that advocates on behalf of more than 8,300 free, local radio and television stations and also broadcast networks before Congress, the Federal Communications Commission and the Courts. Information about NAB can be found at http://www.nab.org/.

Labels: merger, nab, sirius, xm

3/19/2007 02:37:00 PM

SSG Has Merged. You Can Read All Of The Latest SSG Content By Clicking Here



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NAB PAC - Dollars Spent For The NAB Agenda

March 12, 2007

A PAC is a political Action Committee. PACS are formed to forward and lobby a specific agenda.

Did you know that the NAB considers themselves a "Player" in Washington?

Ever wonder what is on the agenda of the NAB PAC?

Well, here it is: Any Comments??????

In today's ever changing world, cutting edge technology is having a profound effect on our industry and the way we do business. NAB continues to work with policy makers and business leaders to ensure that the interests of the broadcasting community are heard as these technologies develop.

What is a PAC?

A PAC is a Political Action Committee used by trade associations, small and large businesses and corporations since 1944. PACs are composed of like-minded people for the purpose of electing candidates who support their interests.

The NAB PAC is bi-partisan, contributing to both Democratic and Republican candidates in the U.S. House and Senate who understand the broadcast industry's agenda and support free over-the-air broadcasting. The commitment of hundreds of radio and television broadcasters has helped the NAB PAC become a key "player" in Congress.

Your generous support for the NAB PAC is an investment to protect and grow your business.

Here are just a few of the many important items on our agenda this year:

- Preventing expansion of LPFM stations into commercial radio stations' third adjacent channel of interference protection

- Fighting increased content regulations and excessive fines for indecent content
Stopping 500 million dollars worth of proposed analog spectrum "user fees"

- Opposing a 1% gross revenue tax on all radio and TV stations that would subsidize candidates' political ads

- Protecting local markets from satellite industry intrusion
It is crucial for every NAB member to provide support for the NAB PAC. Our future as an industry is riding on its success in Washington.

Who does the NAB PAC support?

The NAB PAC supports both Republican and Democratic candidates for the U.S. House and Senate. We support candidates who support our industry regardless of party affiliation. Our PAC contributions are effective because we target them to candidates who serve on critical committees that oversee our industry's interests, including broadcasting and tax issues as well as government regulation.

Broadcasters Coming Together

We understand that a strong, active and permanent presence on Capitol Hill is crucial to expressing these interests. That's why the NAB PAC has become a vital part of the NAB and its government relations activities.

Investing In Broadcasting's Future

NAB's bi-partisan political action committee (NAB PAC) was founded with the primary mission of helping to elect members of Congress who understand and support our industry.


NAB PAC Contribution Form (Members Only)

Labels: nab

3/12/2007 12:26:00 PM

SSG Has Merged. You Can Read All Of The Latest SSG Content By Clicking Here



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XM Strikes Back With SEC Filing

March 5, 2007

XM Satellite Radio Holdings Inc. has distributed and may be distributing in the future the following in response to the National Association of Broadcasters’ position regarding its proposed business combination with Sirius Satellite Radio Inc.


THE FACTS ABOUT WHAT THE NAB IS SAYING

For 15 years, at every turn, the NAB has tried — unsuccessfully — to destroy or delay the deployment of satellite radio service. Their opposition to the proposed XM-SIRIUS merger is more of the same. In fact, the NAB’s outrageous assertions regarding the merger are the best evidence of the extent to which the merger will offer more competition and choice in the audio entertainment marketplace.

THE NAB SAYS

Allowing XM Radio and SIRIUS to merge would create a monopoly.

FACT

The fact that the NAB is fighting so hard to stop this merger from happening is strong evidence that the radio industry fears the increased competition that a more efficient, more diverse satellite radio company would bring. That they would even use the word monopoly in a world where less than 10% of radio listeners have satellite radio shows the extent to which they are overreaching. In fact, the audio entertainment market is a diverse and highly competitive market that includes free “over-the-air” AM, FM, and HD radio, Internet radio, music subscription services, iPods and other MP3 players, CD players, and cell phones, as well as satellite radio. Enabling satellite radio to compete more effectively through the merger will create greater choice, at competitive prices, for consumers across the country.

THE NAB SAYS

The Federal Communications Commission (FCC) prohibited XM and SIRIUS from merging because it would limit competition and hurt consumers.

FACT

The FCC stated in its original 1997 order creating the satellite radio service that it would assess any proposed consolidation of satellite radio licenses by evaluating whether such a transaction would serve the public interest. Based on competitive conditions at the time, the FCC believed that combining the two satellite licenses would not do so. But that was a decade ago. Conditions have changed dramatically since then. Today, competition in the audio entertainment market is intense and dynamic, and will become even more so as technologies and services like 3G, WiMax and MediaFlo gain greater popularity. Enabling satellite radio to compete more effectively through the merger will create greater choice, at competitive prices, for consumers across the country.

THE NAB SAYS

The FCC will view this merger as closely analogous to the EchoStar/DIRECTV merger, which the Commission found problematic.

FACT

Satellite radio isn’t satellite television, especially from a regulatory standpoint. While the FCC raised objections to the EchoStar-DIRECTV merger in 2002, none of those objections applies in the case of the proposed XM-SIRIUS merger in 2007. Consumers today have many means to obtain music, news and other content to listen to at home and in their cars. Competition for audio entertainment today is significantly more robust and dynamic than competition for satellite TV was in 2002.

Currently, satellite radio faces stiff competition from many technologies and entertainment platforms, including free “over-the-air” AM, FM, and HD radio, Internet radio, music subscription services, iPods and other MP3 players, CD players, and cell phones.

In contrast, there was only one significant competitor to satellite TV in 2002 – cable television, and even that was not available in some rural areas.

THE NAB SAYS

Consumers would suffer from a satellite radio merger.

FACT

The proposed merger between XM and SIRIUS is the best way to preserve competition in the audio entertainment market – and the best way to promote the broadest possible choices for consumers.

In the future, once the combination of the companies is complete, the companies’ intention is to enable all satellite radio subscribers to access the broad range of programming offered by each company on a more a la carte basis, resulting in more digital channels of commercial-free music, premier sports, news, talk radio, comedy, children’s and entertainment programming being available to current subscribers of each service. In addition, the merged company will ultimately be able to eliminate duplicative programming and could use the extra bandwidth to offer enhanced public interest programming. Subscribers thus will ultimately have more programming from which to choose and more choice in how they receive their programming.

THE NAB SAYS

A merger would allow subscription rates to rise.

FACT

In order to be really successful, satellite radio must attract many more subscribers. To do this, satellite radio has strong incentives to make its product even more attractive, by adding new services and keeping prices low, particularly in the face of competition from many other audio entertainment providers — including free “over-the-air” AM, FM, and HD radio, Internet radio, music subscription services, iPods, CD players, and cell phones, as well as growing new technologies and services like MediaFLO, 3G, and WiMax.

Because the merger will mean dramatic cost savings and increased capacity for more diverse offerings, the resulting satellite radio product will appeal to more consumers. A larger number of subscribers will itself permit lower prices because the increased number of subscribers (and thus receivers) will drive down production costs and lower distribution costs. And bringing together the best engineering minds from both companies will drive innovation that will also give subscribers lower cost, easy-to-use, multi-functional devices.

THE NAB SAYS

A merger would reduce program diversity.

FACT

The merger will allow the merged firm ultimately to offer the best programming from both services to listeners across the country. And the eventual replacement of duplicated programming with more commercial-free music, more news and talk shows, more children’s programs, more sports and more public service programming means that ultimately subscribers will have more programming from which to choose and more choice in how they receive their programming.

THE NAB SAYS

XM and SIRIUS can’t be trusted to comply with any FCC rules or conditions since they have repeatedly violated the rules the FCC set for satellite radio companies as the original condition for granting the license.

FACT

XM and SIRIUS are both licensees in good standing with the FCC with a sound track record of working with the agency on compliance issues. Both companies take very seriously their obligations as FCC licensees, and a merged company would continue to do so.

THE NAB SAYS

XM and Sirius have violated the FCC requirement that each system include a receiver that works with the other system.

FACT

XM and Sirius have satisfied the requirement that they jointly develop an interoperable radio, working together and with the FCC and they have reported this in filings with the FCC. A merger of the companies obviously will further facilitate the availability of interoperable radios.

THE NAB SAYS

XM and Sirius produce receivers that interfere with broadcast radio stations, which violates FCC requirements.

FACT

XM and Sirius do not produce receivers that interfere with broadcast radio stations. Without the knowledge of XM’s top officials, company engineers designed some mobile receivers that may have exceeded FCC power requirements, potentially interfering with some car radios. As soon as management learned of the problem, it took immediate steps to get those receivers off the market and all receivers marketed today comply with FCC rules.

THE NAB SAYS

Both XM and Sirius violate FCC rules that are designed to limit the number and power of land-based signal repeaters.

FACT

The companies actually built fewer and less powerful repeaters than they were allowed to build. While the technical parameters of some repeaters varied from their authorizations, to our knowledge, none of these repeaters have ever caused interference to any other FCC licensee, Moreover the companies voluntarily disclosed these variances to the Commission, took unilateral action to eliminate many of them, and are working directly with the agency to address any concerns.

THE NAB SAYS

Allowing a merger would only lead the single company to violate more FCC regulations.

FACT

XM and Sirius actually have a good track record of FCC compliance. Broadcasters have routinely violated FCC regulations, and there are reports that one will soon pay the largest fine in FCC history. No one suggests however, that broadcaster rule violations disqualify otherwise appropriate mergers.

Labels: merger, nab, sirius, xm

3/05/2007 06:09:00 PM

SSG Has Merged. You Can Read All Of The Latest SSG Content By Clicking Here



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Dear Mr. Ashcroft

March 5, 2007

Dear Mr. Ashcroft,

I am writing to inquire about your services to the NAB with regards to the proposed satellite radio merger between Sirius and XM.

It is my clear understanding from multiple sources that you had first offered your services to XM Satellite Radio prior to being hired by the NAB.

I can understand that you are a professional lobbyist, and that job carries with it certain slants with regards to your approach to the issues. Your stance, slant and arguments will be designed to serve the best interest of the group that has procured your services.

If you are not aware, you have now suffered a credibility gap due to your offering services to both sides of the issue. Indeed, you would have never approached XM if you did not have what would have been very compelling arguments in favor of the merger. As a consumer, your opinion now carries no weight whatsoever until such a time that you share what your stance would have been if Sirius and XM were paying you rather than the NAB.

I fully understand that every organization and company has many reasons for the stances that are taken. I also understand that lobbyists and attorneys are compensated handsomely for their work on behalf of organizations and companies. What I find troubling, and you should as well, is that it is quite transparent that you had first developed an opinion of support for the merger, and it was only after your services were not retained that you decided to take the other side.

Your conduct as a company has left things such that it is very likely no one will receive any benefit from your services. Surly the NAB can not be happy to learn that your first move was to support the merger. Having that information become public can not help the matter. If I were the NAB I would be quite embarrassed and frustrated that you have take your particular path.

Additionally, consumers and those that support the merger are now slighted because your initial opinion and arguments in support of the merger will likely never see the light of day.

Mr. Ashcroft, you have served this country in a position of power. Your service to the nation is greatly appreciated whether people agreed or disagreed with your stance on issue. No one can ever take your dedicated service away from you. Your legacy however is not decided by your service, but rather your actions, and the public opinion regarding those actions. It takes but a few small mistakes to see a potential legacy damaged beyond repair. In my opinion, you have made such a mistake, and are currently on a path of irreparable harm to your reputation.

It is not too late to fix the mistake you made. You can show some dignity by resigning your post as a lobbyist for the NAB, and publish your opinions both pro and con regarding the merger. This would effectively place you on the sidelines and without a client and billable hours, but can go a long way in preserving your reputation. I can assure you that going forward, any potential client will ask whether or not you have approached the other side, and will likely have a seed of doubt surrounding whether or not to accept your services.

I write this as a supporter of the merger, but also as a concerned consumer. Lobbyists have a place in our government, but what has transpired here is a shining example of the potential problems with lobby groups. Is the merger yet another issue where big dollars spent on lobbyists will be the determining factor?

In closing, I would respectfully suggest that you decide upon a horse prior to approaching them, and refrain from approaching the other horse.

SSG

Labels: ashcroft, merger, nab, sirius, xm

3/05/2007 06:01:00 PM

SSG Has Merged. You Can Read All Of The Latest SSG Content By Clicking Here



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