Minority Firm Seeks Radio Stake

Group Says XM-Sirius Merger Would Limit Programming

Georgetown Partners, a minority-run private-equity firm based in Bethesda, is asking federal regulators to grant it control over channels geared to minority listeners if the merger between satellite radio companies XM and Sirius is approved.

The firm, which has invested in wireless and media firms, has objected to the $4.7 billion merger plan, arguing that a monopoly could limit opportunities for minority programming. Chester Davenport, the firm's managing director, said that if regulators give the marriage a green light, the combined company should be required to turn over some channels to a minority-controlled entity. He said he hoped Georgetown Partners would fill that role, making it a competitor to the merged company.

Without such a condition, the merger would "bestow upon the combined Sirius-XM a stranglehold on nationwide programming and content," Davenport wrote in a letter to the Federal Communications Commission.

Shareholders will vote today on the merger, which was proposed in February.

Two proxy advisory firms recently recommended that shareholders vote in favor of the deal. But the merger's fate lies with the Justice Department, which some analysts expect to issue a decision within a month, followed by the FCC.

Some minority groups have said a monopoly satellite-radio company could exclude niche programming. Offering channels on an a-la-carte basis, as Sirius chief executive Mel Karmazin has proposed, could also place minorities at a competitive disadvantage because consumers are more likely to buy mainstream channels, they say.

"People of color, particularly African Americans, do not fare well under mega-mergers, both from a consumer perspective and a contracting one," said Gary L. Flowers, executive director of the Black Leadership Forum.

In the event of a merger, however, Flowers said he supports Georgetown Partners' proposal because it would increase minority ownership in the market.

XM and Sirius said such a plan is unnecessary, adding that other organizations representing African Americans, women and Hispanics -- including the NAACP and the National Black Chamber of Commerce -- have expressed support for the merger.

"Minority voices are well-represented across the Sirius and XM airwaves today and will continue to be in the future," the companies said in a joint statement in response to the proposal.

In meetings with FCC staffers last week, Georgetown Partners asked to lease about 60 of the 300 available satellite radio channels from a combined XM-Sirius. It wants to use the licenses to create free, advertiser-supported programming in addition to subscription-based content.

The FCC declined to comment on the proposal.

Andrew Berg, a lawyer who represents Georgetown Partners, said the firm has discussed its business plan with both satellite radio companies as well as Justice Department staff members. The firm has not disclosed how much it plans to invest in the venture.

It's not the first time Georgetown Partners has sought FCC-regulated licenses. In 1999, the firm, with GTE, acquired $3.2 billion in cellular licenses from phone company Ameritech. Davenport ran the company that operated the licenses, which later became part of Verizon Wireless.

Some minority advocates object to the merger, on any grounds.

"We haven't seen any conditions that we thing will work," said James Winston, executive director and general counsel of the National Association of Black Owned Broadcasters. "Putting conditions on a monopoly still creates a monopoly."