Sirius and XM: A roller coaster ride

Posted Dec 13th 2007 12:33PM by Melly Alazraki
Filed under: Deals, Law, XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), Politics

Mel Karmazin, CEO of Sirius Satellite Radio

Once again shares of Sirius Satellite Radio Inc. (NASDAQ: SIRI) and XM Satellite Radio Holdings Inc. (NASDAQ: XMSR) are on the move. On Wednesday, shares of the two satellite radio companies got squashed due to concern over the merger review. XM shares tumbled 9.9%, or $1.45, to $13.21, while Sirius dropped 6.0%, or 21 cents, to $3.29.

Interestingly, lawmakers, who sometimes hold hearings about large mergers but have no direct say, voiced their opinion on the merger, with the U.S. House of Representatives antitrust task force expressing concern about the Justice Department review of Sirius's proposed purchase of rival XM.

Reuters has obtained a copy of a letter that Democrat John Conyers, chairman of the task force, and Republican Steve Chabot, wrote to Attorney General Michael Mukasey, dated Dec. 11, in which they are conveying their dismay over reports the Justice Department may be trying to rush through the merger and that "Assistant Attorney General for Antitrust Thomas O. Barnett may intend to grant the merger over the objections of department staff."

Despite analysts yesterday saying the decision ultimately rests with Justice Department officials, stocks of the two companies plummeted as it was unclear what this development means, and investors' confidence in the merger was shaken. Even if representatives hold no sway over the decision, the letter and objections voiced may slow the process.

Today, however, both satellite companies' stocks are rebounding. Sirius shares are up 3.95%, or $0.13, to $3.42 and XM shares are up 7.12% or $0.94, to $14.15 in early morning trading.

What's different today? Perhaps the market has finally realized what analysts had been saying yesterday, that the proposed $5 billion purchase should not be affected by congressional representatives. Stifel, Nicolaus & Co. analyst Blair Levin added his voice to Frederick Moran of Stanford Group and David Bank of RBC Capital Markets, saying he believes the DOJ will "give its blessing," clearing the way to the Federal Communications Commission. Like many other analysts, Levin also favors Sirius over XM.

Any investor who can stomach these two stocks' roller coaster of a ride deserves to be rewarded should the merger finally be approved. For now, Sirius and XM are not for the faint of heart, not even close.

Tags: inthenews, siri, sirius, xm satellite, XmSatellite, xmsr

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Reader Comments (Page 1 of 1)

2-22-2008 @ 9:34PM

Bill said...

These delays by the DOJ have not shocked me one bit. I've been performing work for the Federal Govt. for over 25 years now and I can tell you that in the past 8 years the system has become so burdened with people who can't make a decision it would be funny if it wasn't so pathetic. But as with everything they do they will finally find someone within the DOJ that is willing to put his signature on the dotted line and the merger will go through. They're just looking for the lowest man on the totem pole to put his/her uninformed name on the line so if it goes south the upper management people can deny it was their fault. Welcome to our goernments inner workings. Delay, delay, delay then deny, deny deny!!!

12-14-2007 @ 1:10PM

FRANKV1929 said...

I JUST CAN'T UNDERSTAND THE DELAY IN MAKING A DECISION OVER TWO COMPANIES THAT REPRESENT 4% OF THE TOTAL MARKET OF RADIO SERVICE. NO WONDER THE STATE OF THE ECONOMY IS IN DIRE STRAITS WHEN HIGH RANKING OFFICIALS THAT ARE BEING PAID TO MAKE DECISIONS ARE SITTING ON THEIR HANDS WAITING FOR "WHO KNOWS WHAT". IF YOU CAN'T HANDLE THE JOB....GET OUT AND LET SOMEONE WHO CAN. WHAT'S MONOPOLISTIC ABOUT A SERVICE THAT ONE HAS TO PAY FOR VERSUS NEARLY THE SAME SERVICE THAT ONE CAN GET FOR FREE? NO ONE "IS REQUIRED" TO PAY FOR THIS SERVICE.....SO WHO IS IT HURTING?
IF SIRI/XMSR START CHARGING TOO MUCH FOR WHAT I RECEIVE...I CAN JUST CANCEL THEM....AND BUY AN IPOD...OR JUST TURN ON MY RADIO. IS THAT TOO HARD TO UNDERSTAND....SO GET OFF YOUR DUFFS AND MAKE A DECISION....
TEN MONTHS OR MORE SEEMS TO ME ADEQUATE TIME TO GATHER ALL THE INFO YOU OUGHT TO NEED....FRANK VENTURELLI

12-14-2007 @ 2:55PM

Michael said...

Dear Law makers: If you don't have any direct say in the merger -BUTT OUT !!!!!!!! I think they like watching people lose their life savings.Their not the one who will lose money on the deal.Thankyou ! P.s Cramer when are you running for president ?Teach these people something !

12-15-2007 @ 5:16PM

ERIC said...

THE WHOLE HOLD UP IS BECAUSE OF HOWARD. IF HE WASN'T INVOLVED THIS WOULD HAVE BEEN DONE 9 MONTHS AGO. HE IS A INCREDIBLE TALENT WHO HAS MADE RADIO WHAT IT IS TODAY. STAMP THE MERGE PAPERS AND MOVE ON, ALREADY !!!

1-03-2008 @ 1:34PM

KAREN said...

Hey Frank......you are so right. What is the matter with the men today that are supposed to be in charge ? They can't make decisions or run the country or anything. Well I say It's time for women to take charge of everything, cause God knows they couldn't do any worse. MERGE already.