XM director puts his money on the line


Jeffrey Zients, who has served on the board of directors at XM Satellite Radio since May 2006, has demonstrated his confidence in the company’s future, buying 270,000 shares of stock. According to his SEC filing, the shares were purchased this month at prices ranging from 1.05 to 11.20. At the average price of 11.14, that’s just over three million bucks – the largest insider stock buy since XM’s IPO in 1999. What made Zients so bullish? The Wall Street Journal speculates that it was a federal judge’s refusal to let the Federal Trade Commission block the merger of Whole Foods Market and Wild Oats Markets on antitrust grounds. That has created buzz in the markets that the merger of XM and Sirius, the only two satellite radio companies, is also likely to pass muster.

RBR observation: You do not get to choose your judge when you go to federal court, so unless XM and Sirius are lucky enough to draw Judge Paul Friedman, if and when the US Department of Justice Antitrust Division files suit to block an XM-Sirius merger, getting the same outcome is a long-shot. Friedman’s decision in the organic grocery merger is at odds with decades of antitrust law precedents and is likely to be overturned on appeal. The FTC and DOJ split responsibilities for antitrust reviews, but they use the same criteria. An off-beat ruling by a single judge isn’t going to change how they look at antitrust cases.