The FCC is not done examining the merger of XM Satellite Radio (NASDAQ: XMSR) and Sirius Satellite Radio (NASDAQ: SIRI). It sent detailed questionnaires yesterday seeking new information from both companies.
According to The Wall Street Journal the inquiries could "provide an indication of areas where the FCC could ask for concessions as part of any satellite-radio merger approval."
When the merger was first announced, shares of both companies rose. And each time there is a positive indication that the government may approve the merger, they jump again. But the rallies are short-lived. Third quarter earnings from the two satellite radio companies were modest.
The merger also may not look as good financially as it did at first. The companies do not have entirely compatible technologies, which means some redundant costs may stay in place for years. The sat radio stars, like Howard Stern, may want more money if their programs run on both services. Each firm has contracts with the major car manufacturers; it is not clear how those will be sorted out.
The unspoken driver of the merger is the one billion dollar plus debt that both companies carry. A consolidation that would cut costs might help the companies with their crushing debt service. But the longer the merger is delayed and the more time management has to spend on the FCC matters, the weaker the two companies become. Earnings for the third quarter showed that neither is a booming business right now.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
11-06-2007 @ 4:21PM
Chinook said...
I think this merger has been flawed from the beginning. It would cost a bundle to integrate two companies with two very different business plans and two operating systems. That extra cost would probably be transfered to the consumer.
I do some work with NAB, so I've been paying attention to the details of this merger for a while. Hopefully the FCC will see the devil in the details, too.
11-09-2007 @ 6:48PM
tmcgee said...
Chinook,
The NAB claims the merger will create a monopoly. The NAB represents the competition -- terrestial radio --. Who can't see this.
12-14-2007 @ 10:21AM
wiseone said...
How can anyonw working for the NAB speak on a merger of their competitor? It's as comparable as two different football teams arguing who's got the better team.
To the fellow NAB members and associates; other then your industry, and only terrestrial radio industry, no one else is opposing the merger. The support has come from the small town blue collar to the highest member of congress.
Your argument has failed, terrestrial radio is loosing its grip on their listeners and in turn is losing money.
Radio was the invention of the 20th century, satellite radio, MP3 players and internet radio is the future.
So please, please, stop trying to make a point which makes no sense, and please do not mislead people about the monopoly nonsense. If the consumers support the merger, the car manufacturers support the merger then what can you guys argue about.