Short sellers: A gamble that Sirius (SIRI) merger will be approved

Short sellers are guessing that the merger between Sirius (NASDAQ: SIRI) and XM Satellite (NASDAQ: XMSR) will be approved in the fairly near future. Short interest in Sirius fell 29.1 million shares between May 15 and May 30 to 141.3 million.

There are several reasons for the change in sentiment. One is simply the passage of time. The FCC has had the matter for over a year-and-a-half and FCC chairman Kevin Martin recently said a decision would come soon.

Another reason the merger may get green-lighted is that Sirius is probably willing to give up some of the merged company's spectrum for the government to auction off in the hope of creating yet another satellite radio company.

The final and best reason that the FCC may decide to let the marriage move through is that satellite radio is not the big consumer electronics boom that it was a few years ago. There are too many programming competitors in the market. Sirius and XM cannot even make money. There is, in fact, the issue of whether they can survive at all.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.