Sirius (SIRI) has been waiting for approval or rejection of its merger with XM Satellite (XMSR) by the FCC since the Stone Age. That could change. The agency is hinting a decision will be issued next month. The news is probably not trustworthy. There are almost weekly rumors about the fate and date of the deal.
According to Bloomberg, the head of the FCC, Kevin Martin, said “The commission could act by the end of the second quarter.” That may end up being too late.
During the year-and-a-half since the satellite company began to seek approval for its deal, competition from other products like HD radio, Apple’s (AAPL) iPod, and multimedia handsets has gotten worse. At the same time, the growth of subscriptions at the two satellite radio companies has slowed.
Sirius and XM each have well over $1 billion in long-term debt and neither has ever been profitable. Goldman Sachs say that the new company may have to raise another $500 million to $1 billion. Doing that in the current credit market could be nearly impossible.
The FCC may not kill the merger. It does not have to. The components which would go into the new operation are nearly dead on their own.
Douglas A. McIntyre