Monday, July 28, 2008

Radio: Recycled Fumbles

I swear. I should just recycle my old David “Fumbles” Rehr blogs.
Everyone's telling that "what does the acronym NAB stand for?" joke again.

Don’t pick a war you can’t win, Fumbles.
Even better, don’t pick a war.

You haven’t, you can’t, and you will never win.

Your 410-day war against satellite radio is over – and you‘re toast.
Karmazin 4 Fumbles 3. Your own Grand Old Party buds at the FCC, including Boy Kevin Martin voted you out.

You’ll never be in their club.

True, the dim lad FCC Chairman got the gig because of his wife’s Cheney connection. Yes, we know you were a "Bush pioneer,” raising all that money for his last presidential campaign. Maybe you actually believed you were someone - but to those that defined position you were the grunt guy, the ticket-taker, the worker bee hero of that long-forgotten moment.

How many times must you hear it before it sinks in?

You’re a loser. You have no juice. You’re the radio industry’s status woe.

Psychiatrists call it “compartmentalization,” the proficiency of being able to separate feelings, memories and tasks. It’s a practical skill in dealing with complex issues while still leading a useful productive and even successful life. Cops do it. Lawyers do it. But you can’t.

Fumbles, you wasted how many millions on your second-rate lobbyists to work the FCC?

How about all of those cans of Tabs you’ve downed over the past few decades?

The cyclamates must have had a cumulative effect on your brain cells.

You had at least ten firms lobbying on the NAB’s behalf – with the lion’s share going to the Ashcroft Group, headed up by former Attorney General John Ashcroft. What were you thinking?

XM used the Palmetto Group as its lead dog while Sirius signed on with Wiley Rein. XM and Sirius also employed Mehlman Capitol Strategies, run by former GOP National Committee Chairman Ken Mehlman – and just to keep it on an even keel also hired Quinn, Gillespie and Associates, headed by Jack Quinn, the former aide to Bill Clinton and chief of staff to Al Gore and Ed Gillespie, a GOP lobbyist, and current White House counsel to George W. Bush.

Satellite radio got even while you were getting odd.

If you accomplished anything it was to position the NAB as, at worst, the black hats – and, at best, obtuse and out of touch.
You knew it was a done deal when you were tipped off about that delivery of blank pink slips to the McGraw-Hill building last Friday.

Fumbles, you might’ve lost – but am I the only one calling this decision as good for terrestrial radio? I believe the radio industry actually won one in spite of your infinite incompetence.

Hear me out.

XM has 9.7 million subscribers. Sirius has 8.4. That doesn’t mean the merged company will have 18.1 million subscribers.

It’s no different than a radio station taking out a competitor in the same format. Shares don’t double for the victor. There are many occasions where they don’t even increase.

The same rules apply to a combined XM and Sirius.

A merged XM and Sirius also mean fewer stations in total.

In the interim, the companies will offer a $16.99-a-month bundle called "Best of Both,” available to both XM and Sirius subscribers.

They haven’t released a list of the channels – but how much you want to bet that the package will not include the specialty pro sports channels or Howard and Oprah? That means there may not be a whole lot of takers for the “best of…”

Subscription churn will be a problem. Younger demos aren’t opting into satellite at all – and can you blame them? They’ve already on Internet radio.

A friend who is an XM subscriber is disappointed that Sirius will be the controlling party of the merged company – but he told me he’ll still keep his subscription because of the MLB access.

He’s a displaced Bostonian and bought XM primarily to hear Red Sox games delivered by the hometown radio announcers.

Then I told him he could get the same MLB package on line with Internet radio and listen to it on his brand new 3 G iPhone – and that he’d also have the option to watch live (well, a few seconds delay) video of the game.

He also enjoyed the wide variety of music available on XM.

So, I showed him how to navigate through and receive the hundreds of formats and thousands of Internet radio stations on line.

I didn’t mean to kill a subscription, but I did. It was that easy.

The NAB should leave well enough alone – but it won’t.

Fumbles’ NAB mouthpiece Dennis Wharton whined, “Given such overwhelming opposition, we’re not convinced the final chapter of this book has been written.”

The NAB is threatening to file a petition for reconsideration. Since that’ll hit a brick wall, they will take their complaint to the U.S. Court of Appeals. Fumbles may even try to lobby Congress to reverse the FCC’s decision, which will also go nowhere.

Don’t you hate it when the only friends you have left, Fumbles, are your enemies?

I’ll identify them for you: the two FCC Democratic commissioners that voted against the merger, Michael Copps and Jonathan Adelstein – and the activists groups who have been victorious in blocking further radio deregulation. They’re the only ones on your side. Pathetic.

Fumbles, I think the threat of you writing more twenty-page letters to the FCC, the U.S. Court of Appeals, and everyone in Congress would be taken seriously.
That is, it would be taken seriously by environmentalists - but no one else.


Anonymous said...

"Why the FCC's treatment of the XM-Sirius merger is an abomination"

"On top of that, the FCC will embark on a new initiative to explore the possibility of including HD radio functionality into the XM and Sirius radios. That said, it didn't go so far as to make it a requirement just yet. And while some believe that this deal is a major blow to terrestrial radio, I think that argument is hogwash. The reality of the situation is that XM and Sirius were led around by the nose while the FCC and companies like Clear Channel did everything they could to weaken the two firms."

"The satellite merger undermines public radio.”

"There’s apparently an olive branch in Friday’s decision – the Wall Street Journal’s Amy Schatz says the FCC will issue a Notice of Inquiry about whether future satellite radio receivers should carry HD circuitry, so they can pick up local HD signals. Not analog signals, just the digital signals, which would theoretically spur more stations to think about going HD."

The NAB/iBiquity/HD Alliance owned FCC screwed Satrad big-time! Even though open access was agreed upon, the FCC will mandate expensive, worthless, jamming machine HD Radio in Satrad receivers, and make Satrad pay for it. Both HD Radio and Satrad are headed for the shitter.

Anonymous said...

Anyone who has worked for Mel Karmazin knows that he is loyal to those loyal to him and often his decisions are based on loyalty over qualifications. That being said I believe that the new combined company will be Sirius driven with very little left over from XM other than contractural specialty channels. I think few XM employees will survive the merger and I expect a few Sirius employees to get downsized for not putting in their full 7 days a week employment.

Anonymous said...

I disagree about Mel Karmazin at Sirius. I will bet anyone that Howard Stern and Mel Karmazin's contracts end around the same time and neither will renew. Both Howard and Mel will have made their money, bled Sirius dry and leave it as a rotted hulk which is the same condition Mel left CBS radio in when he split Viacom. My word to the wise is don't waste your money on satellite radio. It will not be worth it.

Anonymous said...

fumbles rehr will write more letters and attempt more stall tactics all for naught. you bring up a valid point about one satrad co. being less competition than 2. let me add that if sirius is the dominant programmer you will not see an increase in subscribers for the dual service. xm and sirius fans are very loyal to their cause. i find xm's music channels better than sirius's overall with more variety and better playlists. if sirius dominates i know many xm subscribers will want out.

Anonymous said...

From the Hollywood Reporter:

Sirius and XM shares drop as merger nears
Wall Street likely reacting to financing issues
By Paul Bond

July 28, 2008, 08:17 PM ET
Sirius and XM, finally set to merge, watched their respective shares plummet Monday, probably Wall Street's reaction to the hoops through which they are jumping to get their finances in order.

Sirius said Monday that it was offering $375 million in stock tied to a $550 million debt placement from XM, designed to refinance XM's big debt load.

Although the Sirius maneuver isn't expected to dilute shareholder equity, the stock behaved as though it would. Sirius shares lost 16.4% to $1.88 and XM was off 11.9% to $8.17. Sirius was the biggest loser on The Hollywood Reporter Showbiz 50 stock index.

The drop in the share prices Monday come on the first day of trading since the FCC's official pronouncement that it would allow Sirius to merge with XM, which should have been a bullish event. Instead, both companies trade near their 52-week lows.

Also on Monday, Sirius disclosed preliminary second-quarter financial data that was basically in line with what analysts were expecting.

The company added 279,820 net subscribers to total 8.9 million. When Sirius combines with XM, the two will boast about 18.6 million subscribers.

Sirius said it expects to report that revenue for the second quarter rose 25% to $283 million and that its loss will have shrunk 70% to $24 million.

Citigroup analyst Tony Wible called the preannouncement "solid" and reiterated his $6.50 target price on Sirius, suggesting his expectation of a hefty 219% gain in shares in the next year or so.

Anonymous said...

Pros: Pro sports on one service.

Cons: Fewer music choices especially if the merger takes on Sirius programming. Their rock staitions suck compared to XM radio's. Sirius also routinely removes channels to put special promotions on. They dumped their AAA station for a full time Springsteen channel. I like Bruce as much as the next fan but it was overkill.

Anonymous said...

I say who wants to bet that SiriuXM or whatever it calls itself ever puts those minority/public access channels on their service or for that matter even pays their $20,000,000 fine to the FCC. It ain't gonna happen. Take that to the bank.

Anonymous said...

From Orbitcast: The merger of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. has finally closed, and the two companies are now one. But the question on millions of peoples' minds is: what will be the new company name?

Well, now after over 500 days, we finally know. The new name of the combined Sirius and XM will be: Sirius XM Radio Inc.

Yes, that's right. Sirius XM Radio. I hope that's not a surprise, because both services will need to continue operation for the foreseeable future. So it only makes sense, though it does feel slightly... uninspired.

The combined company's stock will continue to be traded on the Nasdaq Global Select Market under the symbol SIRI.

Based on revenue, Sirius XM Radio Inc. will be the second largest radio company, and with a combined 18.5 million subscribers, it is now the second largest subscription media business in the U.S.

"I am delighted to announce the completion of this exciting merger between Sirius and XM," said Mel Karmazin, CEO of Sirius XM Radio. "We have worked diligently to close this transaction and we look forward to integrating our best-in-class management teams and operations so we can begin delivering on our promise of more choices and lower prices for subscribers."

"Every one of our constituencies is a winner. Combined, Sirius XM Radio will deliver superior value to our shareholders. By offering more compelling packages and the best content in audio entertainment, we are well positioned for increased subscriber growth. Our laser focus on subscribers will continue and listeners can be assured that there will be no disruption in service. We also believe that the completion of the merger will eliminate any confusion that has been lingering in the marketplace," added Karmazin.

Anonymous said...

Wow...what a bitter, angry article.

Bob Harper said...


(XM has 9.7 million subscribers. Sirius has 8.4. That doesn’t mean the merged company will have 18.1 million subscribers.)

9.7 + 8.4 will equal 10.0 +/-

THAT will be the real number, give or take.

Great blog,

Anonymous said...

Wow...the second largest radio company. And everyone here seems to think that's a great thing. I thought big radio was bad radio. Wait til the firings start. I hear it could be as early as today.

Anonymous said...

Hardship? Neither company could make a go at it on their own? If that was the case the licencee should have turned in the frequency for someone else to run. This is ridiculous. Mel still pays himself well. All the top execs will continue to get high six and seven figure paychecks and the workforce will be cut to nothing. I agree the principles of both XM and Sirius will cash out sooner than later leaving shareholders holding the bag and subscribers with a dead unit.

Anonymous said...

Everything smells rotten in this deal. The merger should not have happened. The NAB should not be piloted by a man who can never win a battle let alone an argument. This is what the government gave us with deregulation, digital millennium copyright act and the approval of satellite radio. Of coure they want to silence internet radio. It's the only medium they don't control yet. I would not be surprised if the RIAA and the radio companies were closer than they appear to be and their intent is to put the indie internet radio stations under. Don't laugh. This is no conspiracy. Remember the FCC and FTC said they would NEVER NEVER allow XM and Sirius to merge. They played their orchestrated game and took their damn time to make it look like they were really studying the issue. What next? The government will bail out Clear Channel when Bain Capital realizes they can't afford it and run it?

Anonymous said...

Satellite radio is facing the same problems as terrestrial radio but for different reasons.

Terrestrial radio ignored its younger demos and as a result there are now generations that have no need for radio because it was never a part of their life. It is not because of iPods or video games. Those excuses hold no water. If radio was providing a service for younger demos and appealing to their wants and needs radio would have numbers. Radio Disney on AM radio no less still gets the pre-teens.

Satellite radio also provides no interest to younger demos. The satellite formats are clones of what terrestrial radio plays. Instead of playing what the teens and 18-24 year olds want satellite copies national playlists and programs the same music. That is why there is no interest with young people on getting satellite radio.

As you said there is no need to get satellite for professional sports since you can also get those plus video on the internet.

Satellite radio could even go obsolete before terrestrial.

Anonymous said...

Clear channel going pvt is more interesting that this crap

Anonymous said...

"Radio Disney on AM radio no less still gets the pre-teens." then you're saying radio in fact WAS a part of their lives.

Anonymous said...

Bob Harper said...

"(XM has 9.7 million subscribers. Sirius has 8.4. That doesn’t mean the merged company will have 18.1 million subscribers.) 9.7 + 8.4 will equal 10.0 +/-"

That is flawed logic - if XM has 9.7 and Sirius has 8.4, then the the combined company would pick up all of the subscribers. What, do you really think, that 9 million subscribers are magically going to disappear?

Anonymous said...

Bob Harper said...

"(XM has 9.7 million subscribers. Sirius has 8.4. That doesn’t mean the merged company will have 18.1 million subscribers.) 9.7 + 8.4 will equal 10.0 +/-"

That is flawed logic - if XM has 9.7 and Sirius has 8.4, then the the combined company would pick up all of the subscribers. What, do you really think, that 9 million subscribers are magically going to disappear?

Anonymous said...

Anonymous said...

"It is not because of iPods or video games. Those excuses hold no water."

Are you out of your mind! iPods, iPhones, Slacker, Pandora, are killing radio - consumers want their own personalized music.

Anonymous said...

David Rehr is a good speaker and shows enthusiasm for the industry he represents. However, that is not enough. Radio needs more than a figurehead speaking for its industry. Why can't the NAB hire a radio person, a charismatic radio person, to represent radio and in an honest open fashion. The NAB hired Rehr because of his alleged Bush connections which proved to be exaggerated. Radio produced a number of creative personalities that truly believe in the product. Let them head up the NAB. Their love and support of radio will do far more for the industry than Rehr reading from liner cards. I agree that he should be replaced and soon.

Anonymous said...

I am inspired by today's comments. To Bob Harper: I agree with you. 10million sounds about right. I also think it will drop from that figure too unless the combined company is serious about creating some strong competitive content.

To anon 315: My kids before they were teens listened to Radio Disney on AM radio. I could get into it too. It reminded me of when we were kids listening to top 40 and album rock in the early eighties. My kids don't listen to radio anymore. 15 and 16. They hear new music from mostly their friends. Some of it I like some of it I don't. They are not into rap but into rock and a lit bit of country too though it doesn't sound like the country we remember. Radio Disney knows how to program to preteens but no one knows how to program to teens and young adults is a safe assumption. I think if we had radio stations with jocks that the kids respected and exposed them to new music the way we were you would see kids listen to the radio. They are not listening because they cannot relate to what they are hearing on the stations that are supposed to be aimed to their demographic.

Anonymous said...

"Radio Disney knows how to program to preteens but no one knows how to program to teens and young adults is a safe assumption."

I was that age in the 1970s, and I never listened to commercial FM radio at that time. It was not daring enough. Plus the DJs were just too old. Most were in their 30s, and that was grandpa age. I listened to college radio then. But as I grew older and closer in age to the people on the air, I got back to listening to regular radio. I expect this generation will do the exact same thing.

Anonymous said...

Had there been a trace of intelligence on the part of Fumbles and his cohorts they would have surmised that the best course of action would have been to do nothing at all. Let satellite go after the merger and not even complain. By their manuvers the NAB showed fear and anger toward a possible competitor and this emotion from Rehr and others made the NAB out to be bullies. Of course they lost. They lost the FTC, the FCC and if they try to petition Congress they will lose that too. Most of all they lost the faith of terrestrial radio lsiteners by trying to block a legitimate competitor. The Harvard Business School will do a case study on this one.

Anonymous said...

Poor Fumbles was hog tied and dumped in the doorway of liberal media. What an end to a pitiful clown. His worst enemies are the only ones on his side. Where is Dr. Kervorkian when you really need him, Fumbles?

Anonymous said...

"By their manuvers the NAB showed fear and anger toward a possible competitor..."

BS. It's no different than a baseball manager who argues a call with an umpire. The umpire isn't going to change his decision no matter how long you stomp your feet or kick dirt on his bases. All you end up doing is get thrown out of the game.

But you might make an impression, so the NEXT close call, you MIGHT get the benefit of the doubt.

And last time I checked, the broadcasters have a half dozen issues in front of legislators, most of them more important than this one.

So OK, you lose this one. The NEXT one is the real fight.

The King's Court said...

Gorman, one radio guy to another. I can't leave my name but you will know who "I is". You called it in Nov. when you said King Melvin would get his merger and called it again when you called da King of Karma the smartest man in any room. Lewie Dickey was offended, who cares? Let me play Gorman for a moment and predict that King Mel will lease the Wash DC real estate, downsize to death by first of week and swing his dick in the face of the rest of the industry just like he did when he seized Viacom. Don't worry about the stock, I'm not. When King Melvin cleans house watch it soar. Buy now, sell a year from now and you will be able to buy your own terrestrial radio station and their prices will be down by 75 % by then. Court is ajourned.

Fumbles Bumbles & Tumbles said...

Mel Karmazin shoved it up Fumbles's butt, too.

From Friday Morning QB: It was a long, arduous battle that is finally over for the man that had the vision of combining the two satellite companies into one entity. And judging by his conversation today with Opie & Anthony, Sirius XM Radio CEO Mel Karmazin is giving plenty of recognition to one entity he feels helped make the merger become reality - the National Association of Broadcasters.

Karmazin made two appearances this morning before heading to a town hall meeting with Sirius employees. His first stop was The Howard Stern Show and then he dropped in during O&A's XM program. With much on their mind, such as the renewal of their expiring XM contract, O&A decided to start the conversation with merger related talk, asking Karmazin if he thought the merger approval process would take as long as it did.

"I believed it should get done," replied Karmazin. "But, throughout the whole process I really questioned whether it would get done. There were legitimate reasons for concern. Did I think it would take this long? Absolutely not."

As the conversation progressed to the strategy for getting approval, Karmazin made a point that the NAB's objection to the merger actually played into his hand for getting approval.

"We needed the broadcasters to be very aggressive in opposing the merger," said Karmazin. "We had the benefit now of all of these people saying, 'Stop the monopoly.' The smart people in Washington were saying, 'If this is a monopoly, why do you care?' The fact that you care and the fact that [the NAB] spent so much money and the fact that terrestrial radio broadcasters lobbied so hard proves that we're in a competitive market that would at least include the 10,000 AM and FM radio stations. [And with] the technology changes that continue to go on - Internet radio, iPhones, whatever is out there - there will be more [competition]. The fact that this merger occurred is great news, but there are still a tremendous amount of competitors out there that we compete with."

Karmazin also revealed he had the benefit of being at a terrestrial broadcasting company when satellite radio was in its infancy stages. "I couldn't see any good reason why satellite radio was necessary coming from a very, very successful terrestrial radio company," he explained. "There was nothing in it for me with satellite radio. All I knew was when you got into your car you had an AM and an FM button. The last thing I wanted you to have was an XM button. The worst nightmare came when satellite radio started to grow and the broadcasters did everything they could to make it fail. Their goal was not to just stop the merger. The reason they wanted to stop it is they believed as stand alones we would be weaker [and] maybe fail. The fact is the broadcasters hope was not that the merger wouldn't happen, but satellite radio would disappear."

Continuing on about the NAB's tactics, Karmazin said, "One of the things they did, which I can't tell you how much influence it had, cause I really don't know [as] it really got down to the very end [with the FCC vote tied] at 2-2, is they put a banner on their building that said, 'Stop The Monopoly.' We took pictures of it and sent it to everybody who was on our list. Our viewpoint was, the fact that they were doing it... they're not lobbying every merger that goes on, why would they care? If we are a duopoly on our way to a monopoly, by definition, they are not in that pie. Thank goodness for it and hats off to the head of the NAB. We all owe him. When we all get to toast this merger, I will be celebrating him first."

When Opie suggested Karmazin was rubbing it in, the CEO replied, "If I knew he was listening, I would be doing more."

Karmazin also revealed "a very influential senator obviously very close to the NAB" privately asked him to agree to the same indecency rules that broadcast radio has in order to have his support for the merger. Mel had a simple answer for the senator, "No."

Discussing the future of Sirius XM Radio, Karmazin said the combined companies give it $2.2 billion of revenue "which makes us the second largest radio company in the world. Only Clear Channel is bigger than we are in radio and we're growing it, they're not. If you combine the number of subscribers, we have about 19 million. The only company in the subscription business that is bigger than us is Comcast. We now finally have a critical mass, big company."

He also relayed that there will be an opportunity to get Sirius programming in the next two to three months on XM, with consumers using the same receivers they have now. It will be select programming with Howard Stern being the only content Mel would confirm along with "selected sports programming and other programming." He also said the same thing will happen with XM programming on Sirius receivers.

Anonymous said...

I would hate to call for someone's head...but David Rehr needs to go away. It was clear from my first meeting with him that he is a LIGHTWEIGHT. Nice man, means well..has worked to understand our industry...but he doesn't....the beer industry hired a guy to lobby for them who doesn't drink beer (Rehr)...the NAB hired the same guy and I'm not sure he listens to radio. His whining about the merger has weakened the entire organization. This was his first battle-and he was thoroughly humiliated. Instead of pouring millions into a fight that now makes our industry impotent, his proper reaction to the proposed merger should have been simple:

"Well, I'm sure the Justice Dept. will make the right decision-this shouldn't even make it to the FCC...all I can say is--if this merger to a monopoly is allowed and recieves FCC approval, there is NO case for ownership restrictions in any radio/TV market in America"

In one fell swoop, he would make an if/then case that would have painted the FCC into a corner.

But alas, Rehr doesn't get it...with the RIAA issue looming, we need more than an empty suit representing this medium.