Now that Phase One of the FCC comment period is over, analysts have been weighing in on the prospects of an XM Satellite Radio (XMSR) and Sirius Satellite Radio (SIRI) merger going through.
Bank of America analyst Jonathan Jacoby, who has been a bit of negative-nancy over the merger as of late, increased his odds on the merger in a recent note. BoA's D.C. contacts peg the probability of a merger passing regulatory approval to around 35% (up from under 30% about 3-months ago).
Bear Stearns analyst Bob Peck, who tends to lean on the more positive side of the merger, issued a note earlier this week stating that the merger would be approved based on merits. Peck seems to think that Sirius and XM will provide more concrete details on a combined company "drawing regulatory focus towards the tangible consumer benefits that will arise from the merger."
Cowen & Co. analyst Thomas Watts said negative sentiment toward the Sirius/XM merger are reversing. Ever since the FCC comment period opened up in early June, "sentiment for XM's merger with Sirius has shifted from negative to positive with more than 3,500 diverse supporters contacting the FCC," Watts wrote in a client note Wednesday. Watts thinks there's a better than 50% chance of the merger going through.
Credit Suisse analyst Bryan Kraft also felt that the Sirius-XM merger has a better than 50% chance of passing regulatory muster. He puts XMSR at $12.50 on a standalone basis and $18 if the merger passes, but in 12-months he thinks those values would go to $14 and $20 respectively.
Sirius-XM really need to provide more details on the A La Carte pricing, pricing for all packages (basic, standard, and "best of" packages), and any price guarantees for the years to come. Simply repeating the mantra "more choices, better prices" is no more effective that the NAB's "merger to monopoly" line. There needs to be details to back it up. The ball is in XM-Sirius' court, so let's play.
Leave a comment