Does the ticking clock mean anything?


Bank of America analyst Jonathan Jacoby doesn't think so. He suggests that the FCC delayed starting the deal clock on the XM-Sirius merger to see if the companies would voluntarily withdraw the application after hitting heavy opposition in Washington. Jacoby also notes that the 180-day clock, which can be stopped by the FCC at any time, will but the decision into the federal election cycle, further decreasing the likelihood of approval.

"Our legal contacts put the probability of a deal receiving FCC approval before the end of Q1 '08 at less than 30%," Jacoby said in a research note.

"According to our legal contacts, any further delay in the approval process puts the deal squarely into the '08 political campaign season, diminishing the probability of success. The only way to increase the probability of success might be to codify price freezes, something that XM and Sirius seem reluctant to do. And this would further diminish the synergy value of the transaction," the analyst wrote.

Jacoby isn't recommending either stock, but sees XM as better positioned going forward if the deal isn't approved.