XM/Sirius has 'em chattering


Another analyst thinks it’s crazy that the DOJ/FCC have not welcomed the pending merger of XM/Sirius with open arms. Sonia Arrison of E-Commerce Times wrote, "As anyone can see, there are tons of radio stations, both on the airwaves and on the internet. When internet radio becomes available in cars, NAB will probably come up with an equally silly ‘duopoly’ argument. However, the bad news is that if XM and Sirius don’t merge, they will likely both be wiped out, as neither has ever made a profit and both are bleeding money." She added, "It’s easy to understand the techno-Luddite urge for older, less innovative groups of companies to use the law to stop competition, but it’s much more difficult to understand why the government won’t step up and make a sensible decision. The future of radio choice may be at stake and America’s lawmakers seem completely out to lunch."

Meanwhile, the American Antitrust Institute filed against the merger, calling for an injunction to stop it. It said this that satellite radio is clearly a relevant standalone market, that "this is a merger to monopoly," and that it will ultimately result in higher prices, more commercials, less innovation and decreased choices for consumers. It says the fact that the companies avoided selling interoperable equipment to avoid competing directly with one another is no reason to reward them with a monopoly.

Finally, Associated Press grabbed a few analyst predictions. Kit Spring of Stifel Nicolaus & Co. thinks the deal will "squeak through" regulatory agencies with conditions; Thomas Watts of Cowen & Co. says DOJ will approve, as will FCC in split decision, and touts the companies as a good bet even with a turndown based on free cash flow potential; directly contradicting that prediction is Mark Wienkes of Goldman Sachs, who agrees that the DOJ is increasingly likely to approve, but says long term prospects are still suspect due to "unrealistic cash flow expectations."

RBR/TVBR observation: We hope this yin and yang picture of the XM/Sirius situation clears everything up for you. By the way, just what is the NAB’s "silly duopoly argument?" And anyway, if internet radio in cars is coming and will wipe out audio entertainment as we know it, why bother doing anything at all with terrestrial and satellite radio other than start collecting licenses so we can put the spectrum to some other use?