Black millionaire wants minority-owned satellite radio network

XM and Sirius Satellite Radio disclosed on Friday that they would continue to make the case for their merger until May 1, but a coalition of civil rights groups, led by an ambitious black entrepreneur, wants the Federal Communications Commission to set conditions for the union that would establish a new, minority-controlled satellite radio broadcaster. Chester C. Davenport has done more than offer his own scenario for the XM/Sirius marriage; he's changed the tone of the debate.

Thumbs up, at first

When Sirius and XM first announced in late February of last year that they wanted FCC and Department of Justice permission to merge, a host of minority advocacy groups filed supportive comments with the Commission. These included the Hispanic Federation, the National Black Chamber of Commerce (NBCC), the League of United Latin American Citizens (LULAC), the Latino Coalition, and the League of Rural Voters.

"For the most part, the mainstream media companies offer very limited music and entertainment programming targeted to the Hispanic community," Hispanic Federation President Lillian Rodriguez-Lopez wrote to the FCC on June 5, 2007. "Satellite radio, by contrast, does provide sought after programming, such as CNN en Espanol, ESPN Deportes, and Mexico Canta."

Many more pro-merger comments followed this statement, among them remarks filed by the National Council of Women's Organizations, a chapter of the African Methodist Episcopal Church, and Women Involved in Farm Economics (that's right: WIFE).

Rethinking the wedding

But the flood of minority and civil rights groups endorsements slowed down by late last year. Then came an October 18th filing from Chester Davenport's Georgetown Partners, a firm based in Bethesda, Maryland, that, in its own words, analyzes FCC regulated communications markets "for opportunities to extend minority ownership and control."

Chester Davenport
(Courtesy Univ. of Georgia)

Contrary to earlier filings, Georgetown argued that a merged XM/Sirius threatened minority voices in broadcasting. "Minority programmers today have two completely independent alternatives to attain national programming reach," the statement observed. "However, in the event that the proposed merger is approved without appropriate conditions, there will be but a single entity in control of all 300+ nationwide radio broadcast channels. Failure to obtain carriage through the single licensee, no matter the reason, would preclude nationwide coverage and the consequent ability to aggregate niche audiences."

And so Georgetown proposed that, as a condition of XM/Sirius merger approval, the FCC require the new broadcaster to "sublease on a permanent basis broadcasting infrastructure and sufficient channel capacity to a minority-controlled entity which would enable that entity to be a viable competitor to the post merger Company."

Subsequent comments asked that at least 20 percent of XM/Sirius be leased out to the new broadcaster; that's a swath of spectrum worth about 50 to 100 channels.

"History was against them"

Chester C. Davenport signed these filings. Assistant Secretary for the U.S. Department of Transportation during the Carter presidency, Davenport was described in 1999 by the New York Times as "one of the wealthiest black entrepreneurs in the nation," perhaps worth close to $100 million.

The proposed XM/Sirius merger is not the first FCC deal that his 18-year-old company has attempted to influence. According to the Times, former FCC Chair William Kennard allowed GTE to purchase half of Ameritech's $3.2 billion wireless operation at least in part because the deal also permitted Georgetown to hold 7 percent equity in the new venture, at a cost of $60 million. Kennard was a strong advocate of minority participation in telecommunications.

Davenport appeared at a May 7, 1999, public FCC hearing to advocate his share of the sale. "From the beginning, the nation's communications infrastructure has been owned by members of a single demographic group," he told the gathering. "A large segment of our increasingly diverse nation has the desire and skills to assume ownership of the instrumentalities of communications in this country, but they are excluded from doing so because history was against them. This merger has the potential to change that."

It did. Davenport became chair of GTE Consumer Services, providing cell phone coverage to Greater Chicago and St. Louis.

Davenport's intervention in the proposed XM/Sirius merger has definitely changed the tone of minority filings about the issue. The National Council of Negro Women's (NCNW) statement, submitted in January, called the union a "clear, present, and unmitigated threat to decency" and added that "programming such as Howard Stern, Opie and Anthony, and Bubba the Love Sponge—which help to perpetuate racist and sexist stereotypes in our culture—drive the business of both companies."

On the other hand, the NCNW filing says that the Georgetown Partners proposal "would ensure that at least one competitor in the satellite radio market would be dedicated to providing the American public with robust and positive family-friendly programming."

Ditto for the National Caucus and Center of the Black Aged, the Black Leadership Forum, and Jesse Jackson's Rainbow-Push Coalition—sort of. Jackson's October 31, 2007, FCC filing did not mention Georgetown, but it argued that if the FCC accepts the merger, "it does so with a structure different from the present—one that best serves the public's good and the public's interest."

Various members of Congress have also endorsed the Georgetown proposal, including Representatives Albert R. Wynn of Maryland, G.K. Butterfield, and Gregory Meeks of Jamaica, New York. Federal Election Commission records list Davenport as a contributor to the campaigns of Meeks, Butterfield, and Wynn—$7,000 in Wynn's case. But their November 2007 joint FCC filing includes just as many Congressional signers who have received no money from Davenport. And over three dozen members of Congress have written to the FCC expressing skepticism of the merger in general.

Can Georgetown Partners win?

Since October, Georgetown Partners has submitted 24 comments or ex parte filings to the FCC on XM/Sirius. The latest, filed on Wednesday, argues that in order for the merger to pass antitrust muster with the Department of Justice, the FCC should adopt a "fix it first" strategy, creating a new "competitive entity... before the underlying merger of Sirius with XM is consummated." That new entity, presumably, would be forged along the lines of the Georgetown proposal.

Will Davenport's campaign work? Few FCC watchers are willing to make predictions about the proposed XM/Sirius union any more, given the Commission's record of indecision on the matter. William Kennard, who is black, is no longer the chair of the FCC. And current chair Kevin Martin's record on minority media ownership issues has not inspired many observers.

But the Georgetown Partners plan isn't structurally too far away from the proposals of various media reform groups. The Media Access Project and Public Knowledge both argue that if the FCC accepts XM/Sirius, it should reserve spectrum for non-commercial/educational programming, lease some space to editorially-independent commercial programmers, and require the new entity to open its network up to third-party device manufacturers.

It's possible that the FCC's Republican majority will find in Georgetown's proposal a simpler fix that addresses some of these concerns and improves the agency's record on helping minority broadcasters. But whatever happens, give Chester Davenport credit for changing the debate about the future of satellite radio.