Thursday, March 01, 2007

"All human power is a compound of time and patience." Honore de Balzac

"It is difficult to set bounds to the price unless you first set bounds to the wish." Cicero

"It's in my office" Mel Karmazin
making reference to the so-called "inter operable" satellite radio yesterday before the House Judiciary Committee's Anti-Trust Taskforce. Mel went on to say the radio would cost $700, a prohibitive price point he is not willing to subsidize. No OEM has one in production. Mel's remarks came last in the panel's opening round. Putting this post together from notes taken during the hearing (missing a lot here, there will probably be a transcript available next week along with the prepared remarks submitted for the record - FYI - Mel did not read his). Setting aside his repeated claims "I don't believe there is a duopoly" or "This is not a monopoly" and his lack of depth in responding to the honorable Maxine Waters' question with regard to his service's and the potential combination's efforts to serve "the community" ("We have Jamie Foxx doing a channel...Foxhole" and a passing reference to a collaboration with Cathy Hughes and Radio One) Mel, ever the great salesman, was on message and well spoken. While I respect and appreciate Ms Waters' line of inquiry, my personal experience with Mel related to his support of "the community" is nothing less than exemplary. In an awkward moment responding to a member's question about a services comparison page on the Sirius website (i.e., "Is brand X, XM?), Mel did not answer the question and seemed unfamiliar with the page.

Overall, it was Mel's show. During his remarks Mel did allow that he has an obligation to make the following case: The merger is not anti-competitive. The merger is in the consumer's best interest. The merger will create more choice, lower prices, less confusion and more content. His talk and testimony came up short on specifics. How will the sat radio sets now in the market receive both services as he suggests? Is the idea to offer one channel lineup simulcast on both services? If so how is that more content? Lots of questions.

Gigi Sohn raised the concept of ala carte or tiered pricing in her opening remarks. She also suggested a "5%" set aside of spectrum for non-commercial, educational, informational programming without editorial control. Further, Sohn proposed a multi-year cap on subscription pricing as a condition of the merger's approval.

David Rehr made a good presentation as an "economist" on why monopoly is not good for consumers. Mark Cooper provided an equally good case that monopoly is just not a good idea. Charles Biggio, the witness with significant legal expertise, offered a fair-minded analysis suggesting the merger may or may not be in the public interest.

Down to the grits: Two hours and fifteen minutes later. My sense is there is not an obvious, early winner. Mel's staff did a poor job providing the boss with the content specifics needed for him to make a better appearance. He needs to give up his position that there is not now a duopoly and that the merger is not about monopoly - too clever by half - he is inviting the fight, losing ground and credibility with that suggestion. David should avoid using "San Antonio" in citing example markets, nothing to be gained, lots of lose. The almost beyond any reasonable repair CC "poster child for consolidation gone bad" image is very real political poison. The others on the panel made their cases well.

The conditions of authorization remain important. The feds said there was to be a duopoly. Further, the conditional grant plainly set forth the parties must agree to the strict prohibition of any potential merger. Mel said more than once that the merger was not necessary. He seems intent on having members believe he is not the Wall Street guy motivated by greed who will say anything to get the deal done but rather the sensitive pro-consumer capitalist working to help Joe Sixpack and family get more for less. No doubt the boldest pitch of his career.

Congrats & cheers: Chairman John Conyers, Jr and to his Anti-Trust Taskforce for conducting the session. Let the record begin. Next up FTC, DOJ and FCC. Patrick Keane on his new job, Executive Vice President and CMO of CBS Interactive. Smart, very smart. Fox on their strong debut of "Are You Smarter Than a 5th Grader?" holds 90+% of the Idol lead-in pulling a killer 10.8 rating 18-49.