Howard Stern, the reason why many people subscribe to Sirius Satellite Radio Inc. (NASDAQ: SIRI), has upset country legend Dolly Parton.

The singer is madder than a rattlesnake trying to bite a fencepost at the self-styled King of All Media for splicing together audio segments that made it appear that she was saying nasty things about celebrities including Kenny Rogers, Linda Rondstadt, Burt Reynolds and Johnny Carson, according to the Associated Press.

In a statement posted on her Web site, the singer/songwriter said she had never been so "shocked, hurt and humiliated in my life...Please accept my apology for them and certainly know I had nothing to do with this. If there was ever going to be a lawsuit, it's going to be over this."

I am sure that any lawyer Parton contacts -- or an law student for that matter -- will tell the writer of "I will always love you" that she doesn't have a snowball's chance of prevailing against Stern. The First Amendment gives performers the right to say vile things about celebrities in what is obviously a parody. Remember Jerry Falwell's fight against Hustler magazine which he lost in the Supreme Court? The same concept applies here.

Sirius Satellite Radio (NASDAQ: SIRI) reported Q4 and full-year earnings this morning, and I have to say that the company, led by the famous and highly-respected CEO Mel Karmazin, tuned into some good numbers. Revenues for the fourth quarter increased 29%; for the full fiscal year, revenues jumped 45%. The net diluted loss narrowed during the quarter to $0.11 per share versus $0.17 per share in the year-ago period, and for the year, it improved to $0.39 versus $0.79.

Perhaps the best news in the earnings release is the cash-flow situation. The company's free cash flow more than doubled for Q4, coming in at $75.9 million. And, hey, it was positive, which is important to note, since this company has sacrificed free cash over the years to invest in its platform. In fact, management noted that, for the first time, the second half of the year saw positive free cash flow (equal to $8.1 million for the period). And subscriber growth was impressive -- the company gained almost 2.3 million listeners, and it ended the year with 8.3 million subscribers. People gravitate toward the various popular brands featured on the platform, which includes shows by Playboy (NYSE: PLA), Jamie Foxx, and, of course, the king of all media past, present, and future, Howard Stern. There's also a lot of sports programming to add value for subscribers, as well as an upcoming slate of health programming called "Doctor Radio."

So, why does the stock trade in the low single digits? Why is it priced so speculatively? For one thing, there is the merger issue with XM Satellite Radio (NASDAQ: XMSR). Until that goes through, investors will have to wait for further guidance on the combination of the two platforms. Also, the market is going to want to see some consistent reports of positive net income on a GAAP basis to become really excited. I like the numbers currently associated with Sirius, and I think it may offer some upside potential for risk capital. As for myself? I'm not inclined to play it just yet. I'd rather see some technical strength assert itself before jumping in.

Sirius Satellite Radio (NASDAQ: SIRI) ended the year with 8.3 million subscribers, up 38%. The company would probably prefer to have had its merger with XM Satellite (NASDAQ: XMSR) approved, but the subscriber growth is a consolation prize.

Chief Executive Mel Karmazin told The Wall Street Journal, "Our gross subscriber additions in 2007 were the highest in the history of satellite radio."

That still leaves open the question of whether Sirius is a viable company without the merger. It lost $121 million last quarter and it has long-term debt of almost $1.3 billion.

Some analysts believe that the merger will bring savings. But, the talent on the two satellite networks is not likely to want to take pay cuts. The new company would also have to run two networks for some period because the systems are not comparable.

The subscriber additions are nice news, but the company is still a long way from being viable.

Douglas A. McIntyre is an editor at 247wallst.com.

The storied merger proceedings between Sirius Satellite Radio (NASDAQ: SIRI) and its hoped-for partner, XM Satellite Radio (NASDAQ: XMSR), took another step on Tuesday, albeit one that was widely expected. Shareholders of both companies gave the merger their collective blessing by a healthy majority.

The sizable hurdles of regulatory approval on the part of the Justice Department and the Federal Communications Commission (FCC) remain. Those opposed to the collaboration say the deal would create a monopoly in the satellite radio industry and point to the failed merger attempt between EchoStar Communications (NASDAQ: DISH), parent of the DISH Network, and DirecTV.

Sirius Satellite Radio (NASDAQ: SIRI) volatility at 68; Arbitrage spread tightens into FCC decision.

• SIRI is recently up $0.22 to $3.53, over 6%. SIRI and XMSR announced on 2/20/07 a merger of equals. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share.
  
• Cowen says: "We expect FCC approval before Dec. 4, the end of the FCC review period. We believe approval as early as Oct. is possible. Maintain Outperform on both XMSR & SIRI."
  
• XMSR-SIRI arbitrage premium spread is at 12%. Mel Karmazin is CEO of SIRI.
  
• XMSR December option implied volatility of 68 is above its 26-week average of 51 according to Track Data, suggesting larger price risks.

XM Satellite Radio (NASDAQ: XMSR) volatility up; Arbitrage spread tightens into FCC decision.

• XMSR is recently up $1.07 to $14.69.
  
• SIRI October option implied volatility of 71 is above its 26-week average of 53 according to Track Data, suggesting larger price risks.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

The Federal Communications Commission is finally going to begin its review of the Sirius Satellite Radio (NASDAQ: SIRI) purchase of XM Satellite Radio (NASDAQ: XMSR). This gives the agency 180 days to complete its look at whether the deal is "in the public interest."

Some members of Congress, citizen's groups, and the stock market have already cast votes on the deal. Except for Sirius CEO Mel Karmazin, most open voting has been to call for the transaction to be blocked. The FCC may feel the same way. Turning down the deal is probably the path of least resistance. Putting the companies together would create a monopoly, the argument goes. Monopolies are bad for the public because they take price competition out of the market.

Wall Street's reaction to the combination is simple. The stocks have been taken down over 20% since the announcement of the planned marriage. Both companies were already trading a historically low levels. What is hard to figure out is whether investors have cut down the shares because they think the deal is good, or have the fled because it is bad.

A combined company would have cost savings, but programming costs could rise as radio stars try to push up their rates because the new entity has more subscribers. If the FCC turns down the deal, the weak balance sheet of the companies could hamper growth. The bulls and bears each have their points of view, but it is hard to say that any one thesis is compelling.

One thing is for sure. The debate is almost over.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Satellite radio companies XM Satellite Radio Holdings, Inc. (NASDAQ: XMSR) and Sirius Satellite Radio Inc. (NASDAQ: SIRI) have continued normal operations as they await the approval on their proposed merger. The stocks, however, declined some 30% since the merger announcement. Although many knew the regulatory approval of the only two satellite radio companies would not be easy, faith in the approval seems to be going lower every day, affecting the share prices of both companies in recent months.

Isn't a merger agreement supposed to hike share price instead of sinking it? Generally, this happens, however, when it involves telecommunications and a threat of possible market monopolization, then the reverse happens. Although, when I liveblogged Sirius's latest quarterly results, CEO Mel Karmazin sounded supremely confident that the merger process would be approved after just a few more roadblocks. Potentially myopic investors don't agree, apparently.

I don't think that this merger is violates antitrust regulation. While it appears that way from the single-minded antitrust regulators, consumers today have more choice on in-car entertainment now than ever before. FM stagnation getting you down? Use that "auxiliary input jack" on most new vehicles and listen to anything from your MP3 collection. Older car? No worries, use and FM transmitter. Still like terrestrial radio? Get HD Radio for those FM broadcasts with CD quality. Antitrust concerns here? Unless you can only use satellite radio (for some odd reason), it's highly doubtful.

According to a New York Post exclusive, The Carmel Group will strongly oppose the merger of Sirius Satellite Radio Inc. (NASDAQ: SIRI) and XM Satellite Radio Holdings Inc. (NASDAQ: XMSR) in a new report that is to be released today. The report goes so much as to concludes by saying that the "merger should not be approved - under any conditions - by the U.S. government."

Some may be asking, Carmel who? Well, The Carmel Group is a research firm that according to the Post, "helped kill the 2003 merger of EchoStar and DirecTV." Still, sponsored by the National Association of Broadcasters -- which, of course, opposes the deal -- it can't be called a fully independent research group.

Regardless, the 11-page report says that an approval of the deal will result "in less service, less affordability, less diversity and less choice in content and hardware." Much the same way as its report on the EchoStar-DirecTV merger, this report proves its point by showing how the competition between the two satellite radio companies benefited the consumer with a list of competitive actions and counter actions each company took.

As I mentioned this morning, the Senate Judiciary subcommittee will hear testimony on the proposed merger of the two satellite radio companies, Sirius Satellite Radio Inc. (NASDAQ:SIRI) and XM Satellite Radio Holdings Inc. (NASDAQ:XMSR).

Anyone who has been following the potential arbitrage profit on this merger (the spread between the per share value of Sirius's offer for XM and XM's share price) knows that investors are still skeptical whether the merger will be approved. However, the potential profit declined from over 20% the day the merger was announced to 12.6% as of yesterday's close, pointing to less skepticism.

Of course, traders and arbitrageurs won't sway the Senate. That would be up to the companies and Mel Karmazin, who had already appeared in Washington to try and gain support for the merger. Perhaps he would succeed and investors are right in narrowing the spread, but can this upside justify the much higher potential downside if the merger doesn't go through?

Investing aside, as a consumer I'm not thrilled about the merger. Already Karmazin said that "prices would go up, but not more than the combined value of subscribing to both company's services." If the merger goes through, I fully expect higher prices, less programming and eventually more advertising too.

So I'm not thrilled. Not as a consumer nor as an investor.

While private equity firms pay bubble prices for bubble assets, Sirius Satellite Radio's (NASDAQ: SIRI) Mel Karmazin is in front of Congress attempting to consolidate an industry whose outlook is not as bad as most perceive. Mel is essentially going for the kill by getting control of an asset that will turn into a free cash flow machine in the next few years.

Financial news reports are filled with Mel in front of Congress battling for his XM Satellite Radio (NASDAQ: XMSR). As a reminder, Mel, over his long tenure as a radio executive, has made a lot of money for Howard, for Mel and for shareholders. Mel loves to make money for people.

On the opposite end of the spectrum, we have private equity firms battle for TXU Corp (NYSE: TXU), a company that was selling for $5 per share in 2002 and is now at $69. TXU is fraught with problems. The deal has to get regulatory approval in Texas and it has to address environment concerns due to its coal-fired power generation plants. In addition, there are reports this morning of a potential rival bid for the company.

Mel is consolidating an industry that is out of favor and few investors care about. The large private equity firms are paying peak prices in desperation to put their money to work.

Advice: Go with Mel and let the private equity bubble-head firms lose a fortune.

Sirius Satellite Radio (NASDAQ: SIRI) is simply eating XM Satellite Radio's (NASDAQ: XMSR) lunch. Mel Karmazin continues to plow forward while XM management wanders aimlessly.

Karmazin reiterated targets set in late 2006, expecting revenue to jump from $637 million in 2006 to $1.0 billion in 2007. Sirius also generated free cash flow, after capital expenditures, of $30 million for the 4th quarter -- a big accomplishment.

Karmazin also said, once again, that Sirius' growth from nascent business to $1.0 billion in revenue is the fastest growth in radio history.

What is more impressive is that while XM backed away from virtually all of its guidance for 2007 and pushed out much of its OEM growth to 2008, Sirius did not do the same. Chrysler will install Sirius in 40% of cars, Ford goes from 4 models to 22 models and Mercedes will install Sirius in two-thirds of its autos.

Not everything will be rosy. Sirius warned that data coming out regarding January 2007 comparisons with January 06, as year-over-year comps will be weak because of such strong comparisons last year due to net adds resulting from Howard Stern. Starting in February, the comps will begin to improve.

Also, churn will jump up to 2.0%-2.4% as some OEM deals reach their anniversaries, up from 1.6%.

All told, stay focused on Sirius. Content of Stern, NBA, NASCAR plus lots of other stuff appear to be driving subscriber adds. Do not run away from this industry due to XM's weak results.

What is the chance that regulators will permit Sirius Satellite Radio, Inc. (NASDAQ: SIRI) and XM Satellite Radio Holdings, Inc. (NASDAQ: XMSR) to combine? According to the New York Times' DealBook, probability estimates range from "less than 50%" to 50%. Thus investors should calculate the value of SIRI and XMSR under at least two scenarios: one where the deal does not go through and the other where it does.

SIRI and XMSR are the only two satellite radio companies out there now. If they merged, the new company would have a monopoly -- which would enable it to raise prices to subscribers and advertisers without the check of competition. Preventing such abuse of monopoly power is one of the reasons that antitrust laws were established. Furthermore, the Federal Communications Commission (FCC) has a rule prohibiting XMSR and SIRI from ever owning each other's licenses.

Last night, Sirius Satellite Radio Inc. (NASDAQ: SIRI) said it passed the 6 million subscriber mark, hitting a lowered subscriber target.

More importantly, Sirius said it will hit its free cash flow guidance number. Historically, upstart communications stocks begin to perform very well when they turn free cash flow positive.

Sirius said subscribers increased 82% versus year-end 2005, adding 2.7 million net subscribers in 2006 - a big number despite the subscriber forecast being lowered.

Mel Karmazin said in previous meetings with the investment community that he expected Sirius to turn cash flow break even by the fourth quarter of 2006, and expects to generate $1.0 billion in free cash flow by 2010. Mel is on target. Mel, seldom, if ever, has missed a cash flow number.

Sirius Satellite Radio, Inc.(NASDAQ:SIRI) will offer live TV service by the end of 2007 in 2008 car models. So says Mel Karmazin, the Sirius CEO.

The new service will cost $13 a month more that radio service, but it is not clear how much the new system will add to the price of a car. Karmazin hopes that the new service will increase yield-per-subscriber.

It is a shrewd move for Sirius. If it can get to market with the service before XM, Satellite Radio Holdings, Inc. (NASDAQ:XMSR) it would offer the smaller satellite radio company a significant "first mover" advantage that could help SIRI get closer to XMSR in terms of total subscriber count. If XM does not have the service, it could also push Sirius well ahead in subscriber yields.

That's If people want TV in their cars. Rear-seat entertainment centers are already a staple in many automobiles. Most play DVDs. It is safe to assume that the cost of the hardware for the TV service will not be cheap. What consumers will pay for the intial system is hard to say.

But, it is innovative.

Douglas McIntyre is a partner at 24/7 Wall St.

Firing quite the shot across the bow of its satellite radio rival, Sirius Satellite Radio CEO Mel Karmazin told audience members at a conference on media convergence that he'd happily buy XM Satellite Radio. Executives from XMSR (surely wondering what "the right price" might, exactly, mean) hadn't commented, yet, at the time of this post.

That would be quite some convergence. As the two companies have raced each other to forge deals with opposing car makers and big media names, and have struggled to out-innovate and out-subscribe one another, it seems as if nothing defines the sector so much as the rivalry.

Monopolistic concerns would certainly be raised by regulators, although really: what harm could come of having only one satellite radio company? It's not like consumers have no other choice for their listening pleasure in their cars, or anywhere else, for that matter -- what with offerings ranging from the iPod to the common FM station.

Regulators, it's possible, wouldn't agree with my "who cares?" analysis: they stopped an earlier proposed deal between DirecTV and Echostar.