There has been a spate of optimistic predictions lately as to the ability of XM and Sirius satellite radio companies to merge. However, Bank of America Securities’ Jonathan Jacoby is not one of them. He notes reports that DOJ antitrust division head Thomas Barnett told legislators that it his agency is moving forward as quickly as possible but that it may need "more information." Jacoby thinks market forces are looking for a 15-45 day window for regulatory blessings, but that this is not likely to be achieved. He discounts the recent Whole Foods merger, where entry barriers are not as steep as they are for satellite radio, and notes the requirement that XM and Sirius change the definition of their business from "satellite radio," where they are a market of two, to "audio entertainment," where they are two among many. He said the FCC may have a hard time explaining why satellite radio is part of a larger market and free to merge, while terrestrial radio is not and is subject to local caps. His ultimate advice, if you’re looking for the merger to go through, is to remain cautious.
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