After months of being "almost" approved, it looks like the FCC may give the merger of Sirius (NASDAQ: SIRI) and XM Satellite (NASDAQ: XMSR) its green light. According to The Wall Street Journal, "The staff of the Federal Communications Commission has proposed that the agency approve the merger."
The two companies may have to negotiate with the agency on pricing before a final approval is issued. The FCC may put caps on what the newly formed company can charge consumers for the service and satellite receivers may be part of that process.
The real question is whether the approval will come too late to save the companies. Because they operate on different technology platforms, it could take over a year for the merger to gain real cost savings. Worse, each company has over $1 billion in debt. Neither has ever made an operating profit.
Satellite radio is also up against new competition for HD radio and portable media players and multimedia cell handsets. Many of the satellite radios are sold in new cars, but auto sales are down sharply.
Getting an "OK" may be better than the months of waiting had been, but the firms may already be in too much trouble for it to matter. .
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
6-16-2008 @ 9:27AM
Kent said...
I agree with Doug that there is an implied concern associated with these two radio giants' merger. Whenever a merger takes place, my immediate is reaction is, the market is too small to support multiple players or they are operating in a mature market. It's obvious it's the former. Mergers are a red flag about any industry in question.