Tuesday, May 6, 2008

Are you kidding me 80 million dollars to broadcast satellite radio, sounds like government extortion.

By Jeffrey Yorke

It’s been 16 years since Primosphere Limited Partners filed with the FCC to get a license to beam radio programming from satellites to receivers in North America -- and for Cliff Burnstein it was also $140,000 ago. Now he’s hoping that a satellite merger will open the door to Primopshere’s long-awaited license.

Burnstein, who grew up in Chicago loving radio – and later was a stakeholder in a group which owned 15 stations on the West Coast in Bakersfield, Santa Maria and other cities until selling out to Clear Channel in the go-go days – still wants to recreate a bunch of channels that draw listeners to radio like the old days.

And, he tells R&R, his partner Peter Mensch, feels the same way. Burnstein says they have no opinion on whether the merger between Sirius and XM should be approved by the FCC, but they have had five meetings with the agency to let the government know that if the companies are merged, they want the Feds to live up to the original rules and have at least two different license holders. And they want to be one of them.

Primosphere, along with Digital Satellite Broadcasting Service, CD Radio and American Mobile Satellite Radio Service paid the government $70,000 each for two “satellite slots,” recalls Burnstein. The government then changed to method of the proceeding and asked for bids on the rights. CD and American Satellite, which later became Siruis and XM, and the ultimate winners with bids between $79 million and $84 million for the licenses, respectively, never returned Primosphere’s original $140,000 deposit.

Burnstein says that “the rules said there had to be two providers and our position from a technically legalistic standpoint is that we should be the other provider.”

Despite a handful of meetings with senior deputy chief of the media bureau Roy Stewart and commissioner Jonathan Adelstein, among others, Burnstein says, he still could not get a read on where exactly the FCC was going with a ruling on the satellite merger but it was also clear to him that FCC officials are “uncomfortable with a single provider.”

Another group, minority owned Georgetown Partners based in Bethesda, Md., is also seeking a government-forced award of satellite spectrum if the merger happens, and it too, has had several in-person meetings with ranking FCC officials to win their favor. But Burnstein says “they don’t have any standing in this. We have a legal standing even if it is by a thread.” And, he adds, Primosphere does not need funding and could be up and running with newly built studio space within six months.

The company would, however, need the FCC to mandate that the merged entity lease some technology to a second company that would need uplink and downlink capability for its programming to satellite receivers. Primosphere would be advertising-based and would offer about 30 channels of mostly music programming, forecasts Burnstein, who is a longtime friend of former XM programmer Lee Abrams. Burnstein says Primosphere’s “will come at this from a music and programming perspective.” While nearly 60, he’s still “a little bit idealistic” but his idea is not to compete with terrestrial radio but “to serve the underserved.”

Burnstein and Mensch operate Q Prime in New York, which has managed Def Leppard for 25 years as well as Metallica, Red Hot Chili Peppers, Shania Twain and the now-disbanded bluegrass group, Nickel Creek, among others.

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