Orbital Decay - Part Two

It's called vig

After running up a huge tab for talent and access Sirius and XM begged to merge, and they got what they wanted, which has not stopped management from driving the company into a cash flow ditch. But what about that 220 million dollar contract with the NFL? Surely the terms are flexible, I mean the NFL must be willing to work with a trusted and troubled partner to do what's best for football, right? ...Right? The Curly R concludes its two part series on the disastrous Sirius-XM merger and its impact on the NFL.

Part One: Mismanagers In Space
Part Two: Whew, Looks Like the NFL Will Be Ok
Footnote: My Letter to the Federal Communications Commission
Follow up: The Liberty Media Bailout

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Given the economy and the precarious state of Sirius XM, either a hostile takeover or bankruptcy sure to happen in the next week, it was with amusement that I read a piece in the New York Times Friday about how MLB and the NFL are going to be just fine thanks no matter what happens to Sirius XM because in their broadcast contracts the leagues smartly required the original companies, XM with MLB and Sirius with the NFL, to place future rights fees in escrow to guarantee funds availability at the time payment was due.

So that means right now the combined Sirius XM company has at least 185 million dollars, 65 mil for the NFL and 120 mil for MLB, in escrow accounts so these two major sports leagues can get paid, even as the firm goes into the tank and shareholders lose everything. That money, were it available would go to good use, specifically to pay bond holders whose next big 300 million dollar tranche of debt comes due on Wednesday.

If the company cannot renegotiate the debt, which is doubtful since the guy that bought it, Charles Ergen of EchoStar is the one that wants to take over the company and like a vampire suck the spectrum out of the business and repurpose it to mobile video meaning the near certain end of satellite radio as we know it, or find new equity investors to pump cash into the venture, then we are looking at difficult future for the company with its viability as a going concern in full doubt.

Yes I know companies do this stuff all the time, put big money in escrow, it is just amusing to me that XM borrowed 62 million dollars last year so they could squirrel away MLB's full rights payment, adding to the company's poor capitalization ratio and now the company may go under even as checks to the NFL and MLB will continue to get mailed, no more broadcasts and shit let the employees go, break as many other contracts as you can and screw your suppliers, baseball and football needs to get paid.

Somehow this situation is reminding me of the time the vice president shot his friend in the face and the friend with the face full of bird shot then went on television and apologized for causing the veep any problems.

I wonder if those contracts and that escrow money will be safe if Sirius XM goes into bankruptcy. One thing I do no know for sure, Mark Newgent is right, if Sirius NFL Radio goes off the air I may wind up in a hospital.



Imaginary Sirius XM combined logo from here.

Orbital Decay - Part One

Blowing other people's money and making it our problem

One of the most important lessons I learned in business school was one of the most simple: mergers never work. At least not for the reasons or in the ways business executives claim they will. Tonight The Curly R debuts a two part series on the disastrous Sirius-XM merger and its impact on the NFL and its fans.

Part One: Mismanagers In Space
Part Two: Whew, Looks Like the NFL Will Be Ok
Footnote: My Letter to the Federal Communications Commission
Follow up: The Liberty Media Bailout

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So how is that Sirius XM merger working out for you? I hope no Curly R readers had any stock. Technically it is still have, not had though with the company staring at a hostile takeover and preparing for bankruptcy as soon as Tuesday the stock is at best worthless and at worst going away.

I have both services, an XM SkyFi 2 and Sirius Sportster 2 in my car, my wife has XM in her car, I sponsor radios in California and Fredericksburg, I am a proponent of satellite radio, I get it.

Which is why I was opposed to the merger between two companies, because competition is good.

In 1997 when these two companies got their charters and secured their broadcast spectrum from the US government, they signed pledges never to merge. And yet like so many large businesses when the operating environment became uncomfortable for them they just decided to change it, and the legislators and regulators went along with it.

To listen to Hugh Panero and Mel Karmazin, the guys that ran XM and Sirius before the merger, it was exactly the ruthless pace of competition that forced them to join together and eliminate consumer choice.

Five hundred million dollars for Howard Stern, 220 million for the NFL, 650 million for major league baseball, PGA golf, NBA, NHL, Martha Stewart, Jimmy Buffett, the Grateful Dead, the list goes on, all the talent and exclusive access to programming, that is what drove up the cost of doing business as a satellite radio company, on top of, you know, maintaining a fleet of orbiting satellites.

Well I hate to break it to you Mel and Hugh but no one put a gun to your head and made you sign those deals. You sold a crapload of equity and loaded up on easy credit with the promise of success over the horizon, a steadily increasing annuitized revenue stream from users, that at some point you would get over the hump on expenses for talent, access and customer acquisition costs.

Didn't happen and does not look like it will.

But one thing that for sure is happening? Subscription rate increases. I got an email from XM last month telling me about an opportunity to lock in low low rates if I act now now now before my rate on additional radios goes from seven dollars a month to nine dollars a month. And to add injury to insult the internet radio streams will not be free any longer, I will have to shell out three dollars a month if I want to listen to either service over the internet, something I have enjoyed for four years.

When the companies announced their intent to merge two years ago Sirius stock was worth twelve dollars a share. A year ago it was four dollars. Today the combined company's stock is worth six cents a share.


Curly R's Orbital Decay continues tomorrow with part two, Whew Looks Like the NFL Will Be Ok.



Imaginary Sirius-XM combined logo from here.

Orbital Decay - Footnote

Kevin Martin is not The Curly R Hall of Fame

I am not simply a disinterested party watching Sirius XM collapse from the sidelines. Not only do I get my NFL news from Sirius NFL Radio, I love the satellite radio model and I want it to thrive. Which is why I opposed the Sirius-XM merger from the very beginning. The Curly R posts a historical footnote to the failure of a bad merger.

Part One: Mismanagers In Space
Part Two: Whew, Looks Like the NFL Will Be Ok
Footnote: My Letter to the Federal Communications Commission

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I do not believe you need a degree in economics or an MBA to figure out that one is less than two. As so it was that when Sirius and XM, flush with cash they did not really have and spending on talent and access like drunken sailors, begged to merge in order that they be saved from themselves, I opposed it, and I followed the Federal Communications Commission case very closely. Below is the letter I submitted to the FCC via their website during the open comment period on this merger in July of 2007:

This merger must not be allowed to happen! This is at once a media merger and a consumer products merger. Consumers have not benefited from relaxed media ownership restrictions in the past decade as a smaller number of large companies dominate each market, resulting in homogeneous programming (as the companies that own the stations face reduced competition and need not take chances to differentiate) and increased barriers to new competition (in this case, another satellite firm that would be hundreds of millions of dollars and years away).

As competitors in the consumer products arena, it is simply not logical and bordering on an objective untruth for these companies to compete on and build their respective brands on sports offerings (baseball on XM, football on Sirius), on-air talent (Opie & Anthony on XM, Howard Stern on Sirius), music selection (the 90s station on XM, the 90s station on Sirius), etc and then state that consumers will actually get a better 90s station if we just stop competing. I am not a sympathetic consumer to the argument that, well we had no idea talent and sports leagues would cost so much and now we're in a hole and need the FCC and consumers to bail us out.

Eliminating like products is the goal of the business. Ensuring that like products continue to compete for our wallets is the goal of the consumer.

If allowed to merge, the combined company will offer weaker customer service and begin to offer tiered pricing, which incidentally Sirius has already started by asking for an extra 3 dollars a month for the 'premium' online internet stream. This is a new tier of service. The tiered pricing Mr. Karmazin has focused on will certainly mean we can keep paying the same and get less, or we can just pay a few dollars more and get what we are used to getting.

Finally, I do not find credible the claim that both systems have the transmission capacity to carry both services, which of necessity would fulfill Mr. Karmazin's promise that we can keep our radios as long as we want and get everything the new company has to offer. XM routinely drops one channel to add one, claiming capacity issues, and Sirius cannot even support the programming they currently have, as many sports events preempt music or talk programming regularly, a situation that caused C-Span to terminate its relationship with Sirius, as Sirius could not promise C-Span an uninterrupted channel 7x24.

This is not a good merger for consumers. Do not permit it. Please do not hesitate to contact me should you have questions, comment or require additional information. Thank you.

Imaginary Sirius XM combined logo from here.

Return of the Winedork

Surrender your testicles now

When last we heard from our wine loving backup quarterback, the pride of Walpole himself Todd Collins, Todd was effeminately posing with a bottle of wine on the sidelines at training camp last July, Dan Dan the Sports Bog Man reported that Todd posed for pictures for the Fall issue of Virginia Wine Lover wherein he would discuss drinking the case of Virginia wine the magazine sent him.

Now no one that knows me can remember ever seeing me drink a glass of wine because I do not like wine. I used to pretend that I could drink wine then I realized one day I can just drink bourbon whiskey and go toe to toe with any wine drinker over nose and bouquet and tones and wine drinkers just get quiet.

Curly R aside: is there a Virginia Whiskey Lover magazine? If so I would like to reach out to them right now and ask for a case of free Virginia whiskey after which I will be happy to talk about what I remember.

Back in September my family and I attended Clarendon Day in Arlington Virginia, as I was heading from the Red Hot and Blue barbeque tent to the beer truck (alas no whiskey at Clarendon Day) I passed the Virginia Wine Lover magazine tent, they were giving away small glasses of wine and selling copies of the magazine. Naturally Todd's big Massachusetts smile caught my eye, I whipped out the camera and snapped some photos of the article...



This is Todd with Patrick Evans-Hilton, editor of Virginia Wine Lover. Note the height difference, I think Patrick is a pretty normal sized guy, at least height wise.



Right click and open this in a new window and read it, it is the full letter from the editor. Money quote about Todd and his wine habit:

Forget the image of sports guys sitting around a bar, eating chicken wings and downing frosty mugs of beer (not that there's anything wrong with that). Collins can quaff with the best oenophile.

Note the Seinfeld reference to homosexuality, in this case inverted so as to make beer swilling and wing eating seem the deviant behavior.



Obligatory and inexpensive Warholesque Photoshopping of Otto Greule's iconic Getty Images photo of Todd Collins from the Redskins-Seahawks 2007 playoff game in January 2008.



Sadly I did not photograph the ensuing pages of the article, just the opening page. Note that the author here is respected Washington Examiner sports reporter John Keim, a man whose work I read every day during the football season. My guess is that John did this on contract and does not moonlight as a Virginia wines feature reporter. Money quote from the first page of the story:

...Once, Collins was drinking some Robert Mondavi Opus One with friends and impressed them his his detailed scent.

"I picked up some leather and everyone was like, 'How did you pick that up?'" he said.

"Then they were like, 'Yeah, I think I pick that up...'"

Leather? Wine? You and some friends? Really? Is this some kind of a joke? Because I am not laughing.

And then for the coup de grace, the shot that makes you go, so I thought you were a football player, a quarterback, the leader guy that evades 330 pound linemen then heaves it forty yards downfield to a guy in stride.

I give you the sweaty brow over the shoulder wine lust I am going to drink the fuck out of you then curl up with my pekingese and a Sophie Kinsella novel money shot.


"I didn't know [Virginia] made so many different types of wine."

I didn't know Massachusetts made so many wussy wine loving football players.



Photos by me of the Fall 2008 issue of Virginia Wine Lover magazine.

Too Many for One Hand

I guess pot does make you smarter

In what must have been a top five if not the best ever Super Bowl, the Pittsburgh Steelers beat the Arizona Cardinals 27-23 at the last second to win Super Bowl 43 and secure their sixth league championship. No NFL team had six Super Bowl trophies before Sunday.

This game featured an opponent left for dead as the Steelers built a 20-7 first half lead over the Cardinals, punctuated by James Harrison's 100 yard interception return for a touchdown as the half expired, it was the longest play in Super Bowl history.

But Arizona would not go quietly, Larry Fitzgerald scored two fourth quarter touchdowns as the Cardinals mounted the greatest comeback in Super Bowl history to take the lead 23-20 with under three minutes to play.

On the ensuing drive with the game on the line Ben Roethlisberger drove the Steelers 78 yards on eight plays including four catches by Super Bowl MVP and pot smoker Santonio Holmes, the final play a six yard falling out of bounds corner route Santonio caught between three Cardinals defenders for a touchdown.

It was a great game, conflatulations to the Steelers.



Santonio Holmes catching the game winning touchdown of Super Bowl 43 behind Cardinals cornerback Aaron Francisco: James Borchuck / AP Photo from here.

Super Bowl Sunday Open Thread

It all comes down to this

Post game update: well that was a heck of a game, results below, for the postseason, seven games, Curly R was 5-2 against the spread, 5-2 straight up. What will this degenerate gambler do until next season?

Super Bowl Sunday is here, get your snacks and your jersey, it is the last opportunity to wear it without committing a fashion faux pas, the Cardinals and Steelers are about to get it on.

Redskins fans know about these teams, Washington played them both this season, beating the Cardinals and losing to the Steelers. For those that were interested in what was happening then and what happened next, here are both previews (Cardinals / Steelers) and both gamewraps (Cardinals / Steelers). I attended the Cardinals game with my good friend Mark Newgent of Redskins Examiner and posted up game journals on the experience here and here. Those Cardinals fans leaving the building as the fourth quarter wound down got the last laugh on us after all.

Last game, last picks, and here they are:

6:00 PM ET, NBC
PIT (-6.5) @ ARZ
Spread pick: Cardinals
Straight up: Cardinals

Yes I think Arizona is going to win this Super Bowl. Pittsburgh is a formidable team on all sides of the ball, I think the Cardinals have a hot hand, are not intimidated, have been underdogs in all three playoff games and rolled up thirty on every opponent on the way here.

Results: Cardinals spread / Steelers straight up. This game had it all, a team left for dead, the biggest comeback in Super Bowl history, the longest play in Super Bowl history and a last second play to win it all. Conflatulations Pittsburgh, you have got yourselves a hell of a team.

Let the game offseason begin.


This is a Super Bowl Sunday open thread.



Cardinals and Steelers logos from here.

Nothing Is Recession Proof

The two biggest parties in the nation, dialing it back

Washington DC area football fans have a unique perspective on things the last couple of weeks. First we had the Inauguration, when Barack Obama brought billions of people to DC to celebrate saving the country, and now the Super Bowl, the championship party for the most popular sport in the nation.

Both with the background of a massive national recession. Would sagging economic conditions put a crimp in these ginormous parties?

Beyond the basic question of whether there is less money for extravagance, there is a larger question for the heretofore bottomless business influences and sponsors of these events. About the Inauguration, when lobbying and moneyed political interests sponsor the day and the Super Bowl, when the NFL recognizes its corporate masters, the larger question is, how much fun should we look like we are having? If the millions that flow through lobbying firms and advocacy groups in the capital year round and counter cyclical businesses like booze, lipstick and lottery tickets piggybacking on the NFL and its network partners are available to sponsor giant self indulgent navel gazing celebrations of largesse, should they be used that way?

Well this year the answer has been not so much. To be sure there was plenty of excess in tribute to the halls of power here in Washington for the Inauguration, I know people that celebrated in style on lobbyist money, free booze all day at the area's premiere steakhouses, lots of gladhanding and celebrations not of a new way of doing business in the nation's capital but rather of new people to do business with, the old fashioned way, with cash, booze and networking.

Still, there was something of a pall on this year's festivities. The largest law and lobbying firms fretted over whether to be flashy, not because this is not the time to appear frugal, but rather because this is not the time to piss of a lawmaker concerned with the appearance of excess.

There were several ball cancellations, the American Music Ball, an unofficial Inaugural Ball featuring Dionne Warwick and rapper Ludacris was canceled at the last minute due to poor ticket sales literally the night before. Guests, VIPs and musical artists scheduled to attend or perform at the event found notes under their hotel room doors saying their comps had been revoked, pay up or head out. Luke Russert, Tim Russert's son, had to cancel his party as did the District of Columbia when they scrapped the Inaugural DC Ball. Others had to reduce prices to go on as scheduled.

And what about all those millions of people that were supposed to descend on Washington, the throngs ready to throw their money at the host city, such a torrent of revelry was it supposed to be that the DC Council voted to keep the bars open round the clock for the whole four days of the event. Well despite the millions of people we all saw on the mall and the teeming of the city streets as the wife and I attended our own see and be seen Inaugural events, the whole weekend was a net loser for the city to the tune of millions of dollars. The day before Barack Obama was inaugurated there were still more than one thousand hotel rooms left available in the DC area.

So much for the celebration of the century.

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Paralleling the fun but not too much fun theme of the Inauguration is this year's Super Bowl. It seems as though you cannot swing a dead cat by the tail and not hit a story of how the economic downturn is affecting Super Bowl week and the perception of the sport at large.

As with the Inauguration, the underlying effort is not actually to save money or spend less or reflect the nation's mood, but rather, the mega profitable corporatocracy in charge of the NFL wants to appear more humble so as not to piss off Joe Six Pack who cannot go to games this season because he lost his job.

Even NFL Commissioner Roger Goodell knows this public relations drill, even as league revenues are up, talk gravely about the economy and concern for the product and the customer and lay low this year. Teams are taking the message to heart, the Browns and Redskins have actually laid people off from team staff, mostly on the business side and get this, the Redskins actually said, the Redskins, the team with the supposed and legendary twenty year waiting list, actually justified the layoff by saying that ticket sales were not where they should be.

As a rhetorical question, how can ticket sales not be where they should be when the team sells one hundred percent of tickets as season packages and there is a waiting list years long? I do not believe you need a degree in economics to figure out that the team runs at capacity year after year.

So, do you believe the league and the owners when they say the economy is hurting and it is beginning to take a toll on the business of the NFL? Or do you believe the players union when they say teams are as profitable as ever and rich owners are simply using the downturn as an excuse to reduce head count and increase profits at the expense of higher workloads on administrative peons?

So the parallel continues, down in Tampa this week the story is about events being canceled or dialed back. Playboy, host of a gala party in the Super Bowl city the past nine years, canceled this year's event, instead of laying down two grand to party with Hef in the host city, this year you can drop fifteen hundred to go over to Hef's house and watch it on his big screen.

The Brooks and Dunn celebrity golf tournament and party? Cancelled for lack of sponsors. Sports Illustrated's start studded swimsuit model and portly sports writer bash? Cancelled. I mean come on, if Sports Illustrated cannot muster up for a party then you know things are bad, I will bet the Super Bowl accounts for forty percent of new subscribers every year, that is deliberately angering your god.

And once again like Inauguration weekend for DC, Super Bowl week is now predicted by Tampa to miss revenue predictions as fewer people come to town, stay shorter periods and spend less money.

Enjoy it while it lasts, while the sport takes a once in a decade break to realize the fans are the customers and not the gigantic corporate masters like InBev and Pfizer and General Motors. Even if it's just for show.

Now get your Super Bowl party pants on, kickoff is in four hours.



Composite image by me. Source images, Roger Goodell: David J. Phillips / AP photo from here; Barack Obama: Getty Images from here.