FCC Lightens Its Stance on a XM & Sirius Potential Merger

Just yesterday there were comments out of Kevin Martin, Chairman of the FCC, panning the would-be could-be speculated and pondered potential merger between XM Satellite Radio (XMSR) and Sirius (SIRI).  His comments were taken on an as-is basis yesterday, but today the media reports note him saying the rules barring a merger could be altered if a change was requested.

Here is what we said yesterday:
Kevin Martin, Chairman of the FCC, has said that FCC rules would prohibit a marger in satellite radio.  Could this be changed?  Sure, with some serious lobbying and petitioning, long-term concessions, and likely a costly uphill battle.  Satellite radio is not deemed a critical media support mechanism out there yet, so this makes little sense that the FCC would be out there crashing any merger hopes.

What is amazing to me is that analysts and media don’t do more work to think past an obstacle like this.  The US hasn’t blocked a merger in 7 years, not even the ones that should have been blocked.  This hurdle is not huge, and they could make concessions and long-term price agreements to satisfy concerns. 

Current reports say no request has been made.  You can still smell something here if you think about it.  And you already know Wall Street is telling the companies to merge.  This story is getting very long in the tooth, so if they are or aren’t going to merge it would be nice if the companies would just say yes or no.  Enough on that.

It is without surprise that XM Satellite (XMSR) and Sirius (SIRI) are trading up: XMSR up 4% at $16.07 and SIRI up 4% at $4.012.

Jon C. Ogg
January 18, 2007