There have been a lot of comments by analysts over the recent document request by the FCC. Some say it means that a decision by the FCC is close at hand. Others say it means that a decision won't be rendered anytime soon. In the context of recent headlines, we don't see how any analyst could conclude that a decision is close at hand. Without the recent headlines, close might mean 3 months. However, the headlines seem to indicate that a DOJ decision could be rendered this week. So, it that context, "close" means to us this week or next. That isn't going to happen. We do believe the Commission is "close" to beginning its determination but it is a long way from being finished.
The FCC already has most of this information at its disposal. However, the FCC is a ubiquitous organization. It could be that those making the decisions don't have the information ready at their disposal; i.e., they can't find it. Plus, the same information has already been provided to the DOJ, so it is probably less of a burden just to ask the satcasters for the information. We were amazed at the brevity of the merger application in light of the application of the DirecTV/EchoStar application. The XM and Sirius have been accused of trying to exempt themselves from the conventional merger analysis. Their application seems to reflect this. Most all of this information should have been included in the original application. In our opinion, the request is just the FCC attempt to acquire all the information it needs to perform a conventional merger analysis. It is a lot of information to process. First the FCC must digest the material, analyze it against the horizontal merger guidelines, generate its determination, fact check, review, spell check, and perform the final review, or something along those lines. If the FCC has already digested the filed comments and has already started forming an opinion, we don't see a determination is less than 3 months. If not, it might be more like six months. It certainly is not a matter of weeks.
For those that favor the merger, it does bode well in the sense that FCC is not summarily rejecting it; however, it means nothing in how it might ultimately rule. It gives hope; that's about it, in our humble opinion.
One question conspicuous by its absence is anything on satellite weather. This is an area of a clear monopoly should the merger be approved. The FCC obviously is not concerned about it, so this is a positive for those favoring the merger.
The detailed request for the number of FM and AM stations in each census block and in each zip code leads one to believe that the FCC is considering terrestrial radio as competition. If so, this would be a major victory for the pro merger camp.
There are lots and lots of questions on interoperable radios. Interoperable radios were a major theme throughout the comment period. The failure of XM and Sirius to comply with the interoperable mandate could be an issue with the FCC. The toughest questions are about interoperable radios. The FCC isn't leaving any wiggle room. It is about time, in our opinion, to resolve this issue.
The technical details for the repeaters is a bit puzzling. The FCC doesn't seem to be focusing on violations that many of the merger opponents have disparaged the satcasters about. That's a positive for the merger camp, but we never thought it would get any play. It's just the technical details the Commission seeks. Maybe the FCC is attempting to determine how one system might be adapted to another. The details would seem to have little bearing on the merger. The receiver details are applicable with respect to interoperability. The step to migrate all of XM's subscribers to a common platform is a very telling request. The FCC is at least entertaining the idea of whether or not a single platform is feasible. If so, then this could imply the possible lost of the XM or Sirius frequency band.
The FCC is certainly not taking the public benefit claims at face value. It is digging into the details. XM and Sirius will have to prove their claims. This is likely the meat of the request. If it is not a public benefit, the merger will not be approved. There in no focus on minority programming. It doesn't appear that this will be an issue. The recent opportunism by Georgetown Partners would likely get much play, in our opinion.
In the final analysis, we see it neither as positive nor negative. However, it seems to indication that the final determination by the FCC is months away.
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