Yesterday both XM and Sirius reported in a SEC filing that the Department of Justice has issued a “Second Request”, under the Hart-Scott-Rodino Act.
Reuters points out that antitrust authorities issue such a request if an initial review turns up potential antitrust problems. The Second Request requires that the companies to provide large amounts of information and is followed by a more in-depth investigation.
While not necessarily a surprise, these Second Requests are not really typical.
Bob Peck, analyst at Bear Stearns, wrote in a recent report that the DOJ/FTC use "significant restraint" in issuing these Second Requests.
"Between 1998 and 2005 ... the agencies issued second requests at an annual rate of between 2% and 4.1% of the total number of reportable transactions," wrote Peck, citing a FTC merger review announcement dated February 16, 2006.
"From 1998 to 2005, the annual percentage of second request investigations by the FTC that resulted in some type of enforcement action (that includes transactions that resulted in consent decree or restructuring as well as a very small percentage that were challenged) ranged from 44% to 78%," he added.
Sirius-XM said that they "intend to respond expeditiously to the Second Request."
"It doesn't surprise me at all. I didn't think anything was going to sail through on this merger. I would expect it to be as complicated as it can be," said David Bank, an analyst with RBC Capital Markets.
I work with the National Association of Broadcasters and I'm glad DOJ is being extra careful with this merger because it will be detrimental to local radio stations.
Even though satellite radio caters to the national market, XM Sirius would be able to establish exclusive deals with local sports teams, for example, that would undercut local broadcasters advertising revenue.
WAH WAH WAH.
Hears a thought. XM/Sirius already provide local content that the philadelphia market doesn't have. The traffic reports.
Oh Philadelphia does provide a report but it is NEVER correct. I still can not understand how they can screw it up when they are looking at the current traffic conditions on a damn TV screen.
springfling: Wait... how is that any different from today? XM has an exclusive relationship with the MLB, and Sirius has an exclusive relationship with the NFL. A merged company doesn't change this - they're still exclusive partnerships that exist today in a pre-merger context.
Regardless, this is all in the interests of YOUR members. Not in the PUBLIC interests. When the Cardinals move from the 50,000-watt KMOX to 5,000-watt KTRS, guess who loses out? THE PUBLIC DOES.
Stop acting like the NAB is looking out for the greater good. We all know that's not the case.
>> "I work with the National Association of Broadcasters and I'm glad DOJ is being extra careful with this merger because it will be detrimental to local radio stations."
A: Fuck you and fuck local radio stations. If they didn't suck as bad as they do, there would be much less demand for Satellite radio
B: Most radio stations in any market that matters aren't even local anymore. They're controlled by a few giant conglomerates who foist the same generic shitty playlists, personalities and endless commercials onto every station they own. Frankly, I hope every single commercial terrestrial radio station goes bankrupt. That won't happen, but it would be great if it did.
Funny, Not one deal XM or Sirius made was Exclusive. Sure nearly every one was Exclusive Sat Rad to XM or sirius but are any of them Exclusive Audio Rights? Is NASCAR still broadcast on MRN? YES Is Basketball/Baseball and other still on AM? YES.
Bottom line is that NAB members have not been blocked from broadcasting ANYTHING. NAB member chose to turn their backs on the listeners and consumers. I guess its time to turn on that little FM transmitter in my SkiFi2 again. How do you respond to that Cracker?
Springfling -- So your perspective is that the government must protect local radio at all costs, even though it is an outdated and dying medium? In other words, screw technology.
You probably hope we don't find a cure for cancer -- can you imagine the negative impact it would have on cancer researchers? Wow!
Wow jeff watch the racial talk :)
Spring -- do your research...I believe NAB opposed FM as detrimental to AM...
I'm glad your arguments weren't around when they came up with CDs in the early 80's ... "The vinyl record makers of America are opposed to CDs because this much superior technology is detrimental to our business..."
The exclusive deals are fine when both are separate companies but together the XM Sirius monopoly will give them more market power. Keeping them separate entities keeps the advertising rates competitive for all players.
Not everyone can afford satellite and local broadcasters have a right and responsibility to provide free programming to local communities.
Horrendous reporting Ryan. How many major media mergers over the last decade have not had a second request from the DOJ? Have there been any without a second request?
Not typical??? One of the worst posts I have ever seen on this blog. Like I always say guys, you are following the media industry and quoting tech analysts? Do they know anything about media? Bad stuff Ryan.
Actually Bob Peck is an extremely well respected analyst. Ryan was not incorrect in quoting him at all. His words yield high credibility, especially in the Satellite industry. He appears on CNBC quite often during a discussion on any Satellite company.
Robert Peck's source comes from "Announcement of Federal Trade Commission Chairman Deborah Platt Majoras On Reforms to the Merger Review Process" dated February 16, 2006. This was not his opinion, he was quoting a source.
Though, I'm not sure how between "2% and 4.1% of the total number of reportable transactions" can be considered "typical" either, can you?
That said, it's not necessarily BAD NEWS either. It's just part of the process. Was it a surprise? No. This is a dicey merger, so added government scrutiny better not come as a surprise to anyone.
Did I slice it into the major media merger sector? No. My bad? Sure, I'll take that. But the reality is that the vast majority of HSR filings allow the 30-day period to simply lapse and the mergers are allowed to go through. And that's all that I'm saying.
But if I offended you, I sincerely apologize. Please don't fire me. :)
>>>The exclusive deals are fine when both are separate companies but together the XM Sirius monopoly will give them more market power. Keeping them separate entities keeps the advertising rates competitive for all players.
SPRINGFLING: That's not a very strong argument. Broadcast radio billed $21.669 billion in 2006 -- up 1% from 2005. XM and Sirius billed $66 million in Ad revenue for all of 2006, combined... which was 0.3% of the total advertising of broadcast radio.
To put it into better perspective, both KROQ/LA and WLTW/NY individually billed more than XM/Sirius combined last year.
How you can possibly claim that by them combining is going to have a negative effect on advertising revenue is insane. That argument is even weaker than the NAB's claim that satellite radio and terrestrial arent in the same market for listeners.
>>>>XM Sirius would be able to establish exclusive deals with local sports teams, for example, that would undercut local broadcasters advertising revenue.
It is called competition, but don't worry, David Rehr and Jimmy For Sale Schaeffler say that satellite radio is not competition to terrestrial radio.
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How did the Alabama State Senate vote on Mike Hubbard's resolution against satellite radio? Anyone?
If it flies, it's an airplane.. if it quacks, it's a duck... don't ask me to explain that because I don't know what it means.. just like the merger.. is it better to have the merger, or not?? I think it would be good in some instances but not in others.. I know what I fear the most is with a monopoly satellite radio company there would more than likely be government regulations.. I think I'd rather have my XM struggling rather then the new America Satellite Radio company as the strong and regulated like regular terrestrial radio... total yuck.. totaly Clear Channel... oh wait, that's who will own one or the other... double yikes... but you know they desrve it, neither company knows what they are doing... so to sum it up--- they are an anchor..now watch them sink ....
I've been trying to be a patient listener and wait for the outcome, but oh well....
WTF is the NAB really whining about? Isn't Clear Channel one of their biggest members. Didn't XM have to start allowing commercials on several stations because Clear Channel owned about 15 stations.
If NAB has it's grubby hands in every pot, who really cares if SatRad combines two smaller pieces of the pie to form a still smaller piece (compared to FM). I don't know about you, but the NAB seems to whine more then most of our spouses. Have they just become the National Association of Bitching?
"Though, I'm not sure how between "2% and 4.1% of the total number of reportable transactions" can be considered "typical" either, can you?
That said, it's not necessarily BAD NEWS either. It's just part of the process. Was it a surprise? No. This is a dicey merger, so added government scrutiny better not come as a surprise to anyone.
Did I slice it into the major media merger sector? No. My bad? Sure, I'll take that. But the reality is that the vast majority of HSR filings allow the 30-day period to simply lapse and the mergers are allowed to go through."
What the? How can anybody compare media mergers with ALL MERGERS! Its irrelevant comparisons. 99% of non media mergers pass through without a second request. Name ONE major media merger (and there have been a ton of them in the last decade) that hasn't had a second request Ryan. NAME ONE! My thinking here is that you haven't followed the media business at all. Am I wrong?
If 2 small pharmaceutical companies merge and it goes through without a second request, or a couple food companies do the same thats relevant to a media merger? How can anybody say that its not typical when you are looking at media mergers? I can't believe what I am reading Ryan.