The FCC has asked for more detail regarding the proposed merger of XM Satellite Radio and Sirius Satellite Radio, and that has the press and minions of Wall Street buzzing. Word is that a top DoJ official — anti-trust division head Thomas O. Barnett — is going to overrule a staff denial recommendation, and many but not all see the latest move by the FCC as a sign that it may follow suit.
Bear Stearns analysts noted the emphasis on specifics in the FCC info request, and read it as an indication that it is close to making a determination on whether it would flash a green or a red light. The FCC’s questionnaire return date is 11/16/07 and the 180-day merger turnaround clock expires 12/5/07. Robert Peck at Bear Stearns believes that the FCC would simply stand on existing regulation if it intended to block the merger, so the simple fact that it is still gathering info is a positive.
However, Jonathan Jacoby at Banc of America Securities saw it just the opposite, saying if the merger was going through, the FCC wouldn’t need so much info.
Motley Fool, which long ago predicted the merger would go through, summed it up like this: "The deal regulators are now like a girl at the bar who has dodged your advances but hasn’t shot you down completely. All Mel Karmazin needs now is one more drink and the perfect pickup line to seal the deal."
RBR/TVBR observation: Consolidation is currently causing a minor frenzy in Washington, and according to most observers, the consolidation can of worms FCC Chairman Kevin Martin (R) wants most to open is the cross-ownership variety. He may not wish take the can opener to other flavors, such as small-market TV duopoly or satellite radio. Both houses of Congress are alert to these proceedings, throwing an additional potential monkey wrench into the works. The Senate Judiciary Committee under Pat Leahy (D-VT) took a very dim view of this merger during hearings earlier in the year, which may spur some to add this to the laundry list of FCC actions brought up for intense scrutiny.