Barron’s quotes investment research operation Stifel Nicolaus as saying that the odds of a successful Sirius (SIRI) merger with rival XM Satellite (XMSR) are 55% to 60%.
Now, how do they know that? Even sports radio talk show hosts don’t bat 50/50 on their NFL play-off picks. Most people don’t win at the horse races or the black jack tables.
Stifel’s explanation for its math is that "the key issue may be how the DOJ views competition from terrestrial radio, iPods and other music sources." It seems that has been the issue since well before the deal was announced. But, maybe it is new news and everyone else missed it.
Stifel likes the stocks even if the merger does not go through. There could be a positive catalyst like a major car company putting satellite radio in all of its cars as standard equipment.
Or, Sirius could miss its subscriber targets and run out of money for debt service.
It’s a toss up.
Douglas A. McIntyre
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