The proposed merger between Sirius Satellite Radio (SIRI) and XM Satellite Radio (XMSRS) may have lost momentum in receiving its necessary regulatory approval, according Bank of America analyst Jonathan Jacoby.
The problem, according to Bank of America's D.C. contacts, lies in Sirius-XM's joint reply comments on changing the "rule" that prevents either satellite radio provider from merging (also known as the regulatory "Achillies heel"). Jacoby wrote in the client note that the D.C. contacts felt Sirius and XM's joint arguments "were somewhat weak," while the NAB's comments argued the merger could "set a precedent that would encourage a wave of media consolidation."
Sirius and XM filed their reply comments for the Notice of Proposed Rulemaking (NPRM) to the FCC late last week. You can read the filing here (PDF).
Bank of America's contacts in D.C. saw Sirius/XM's filing as simply a request to repeal the decade-old rule, and "lacked the substance" that the Federal Communications Commission likely would require.
Meanwhile, the NAB's filing told a different story. They argued that if satellite radio is considered part of a great audio entertainment market, then this would set a precedent, and the FCC should abolish media ownership restrictions as well. If the FCC simply waives the rule, they risk losing - again - on ownership issues at the courts.
You can read the NAB's filing here (PDF).
The potential precedent this merger would set - for both the FCC and the DOJ - could very well be the biggest obstacle for Sirius and XM in trying to get this deal to pass. It's also by far the NAB's best argument yet (and a break away from the consistent "merger to monopoly" line), but playing this card also puts their goals for further media consolidation at risk.
Quite honestly Ryan, does anybody pay attention to anything that Jacoby says anymore? I never even hear him ask any questions on the Sirius earnings calls. I hear every other analyst ask questions on the public calls, but not him. I think its pretty obvious to everybody and has been for a long time now.
Aint that the truth Muscle13
>> I never even hear him ask any questions on the Sirius earnings calls.
Apparently, you don't comprehend that Sirius decides who does and doesn't get to ask questions on the conference calls. It is no accident that the questions come from those analysts who are most supportive of Sirius (it is no coincidence that Merrill's Mancini gets a question each and every time).
While none of the analysts have really understood the merger, Jacoby has consistently been among the most level-headed of analysts covering the sector. Which is the reason SIRI management doesn't allow him to ask any questions.
Sorry, it is late -- on the subject, though -- the comment that the filing "lacks substance" is a very apt description of the entire pro-merger argument. It lacks any substance -- whether you're talking about synergies, competition/anti-trust, or the political battle that has been waged -- it lacks substance. The arguments I see claiming synergies have been without any foundation, whatsoever (even professional analysts cannot bring themselves to provide any hard data to support what can only be called ridiculous claims).
The mass confusion over what constitutes "competition" and forms the basis for a substitute for the sat radio product has been just downright silly from the pro-merger forces. And it seems evident this mass confusion was created as part of an effort to get this deal through without the investors, the consumers, or the regulators having an informed choice to make.
And the political battle, engaging everyone from the NAACP to the League of Rural Voters (literally, a one man show) is an embarrassment for the industry.
It is really time to get it over with. The regulators need to do what they're going to do and let the chips fall.
i dont understand this argument. so if xmsiri are allowed to merge this opens the door for future media consolidation? the fcc cant weigh each merger on its own merits? are they really that stupid? in all the decisions theyve made over the years has this been an issue? i am finding it hard to believe that the fcc/doj will suddenly be helpless to take further media merger on their own merits. the fcc/doj come off sounding weak and helpless in this story. if this is the case and other companies do indeed merge "just because you let the other guys do it" then shame on the gov for having no backbone and letting big buisiness walk all over them. they deserve what they get.
(it is no coincidence that Merrill's Mancini gets a question each and every time).
And Bear Stearns, and Deutche Bank, and RBC, and Lehman, and Citibank and just about every other analyst besides Jacoby asks questions on every earnings call. This isn't a recent post-merger announcement occurrence either. I think its pretty obvious where Jacoby stands on Sirius. I remember reading a quote from Jacoby that the Stern effect was coming to an end about a month or 2 after Stern started and XM was coming back. How many straight months or years has Sirius dominated NPD numbers now?
Will Jacoby be ripping Sirius 5 or 10 years from now? I don't see why not. I haven't heard anything positive for years. He may rip them when they become one of the biggest media companies in the world too.
When Karmazin came out with the A La Carte announcement some weeks back what was the first thing I read in the press about what Jacoby said? Increase of price per channel on A La Carte vs. price per channel today with no a La Carte.
The SEC should investigate Mr. Jacoby. He appears to have an extra interest in this outcome. Could he be in Rear-ends back pocket?
The SEC should investigate Mr. Jacoby. He appears to have an extra interest in this outcome. Could he be in Rear-ends back pocket?
As the hype and irational exuberance of many investors disapears. (The wet derams of many to hear Stern and MLB on one network) The realization that the Synergies are not as many as previously thought until 2012 and beyond. The aditional conditions being asked for by anyone and everyone, The request for the merged company to "give up bandwidth".
As the hype and irational exuberance of many investors disapears. (The wet derams of many to hear Stern and MLB on one network) The realization that the Synergies are not as many as previously thought until 2012 and beyond. The aditional conditions being asked for by anyone and everyone, The request for the merged company to "give up bandwidth".
The merger was a bad Idea from the beginning and has exposed the NAB's meddeling in Sat rad. Its time to drop the Idea.
I invented wet derams.
OK.. credit given to Hoo hoo for wet dreams. LOL
his "contacts" saw Sirius/XM sealed responses??
DEATH TO THE MERGER
DEATH TO KARMAZEN (not really, I don't wish anyone dead)
jeff wrote: "As the hype and irational exuberance of many investors disapears. (The wet derams of many to hear Stern and MLB on one network) The realization that the Synergies are not as many as previously thought until 2012 and beyond. The aditional conditions being asked for by anyone and everyone, The request for the merged company to "give up bandwidth".
The merger was a bad Idea from the beginning and has exposed the NAB's meddeling in Sat rad. Its time to drop the Idea."
I agree jeff. Mel is trying (has tried) to merge the two almost to save (his) face at this point. It isn't entirely his fault however, but he did realize his business model wasn't going to come into fruition. The synergies aren't arriving anytime soon, and neither is massively increasing advertising revenue, which is Mel's forte'.
"I agree jeff. Mel is trying (has tried) to merge the two almost to save (his) face at this point. It isn't entirely his fault however, but he did realize his business model wasn't going to come into fruition. The synergies aren't arriving anytime soon, and neither is massively increasing advertising revenue, which is Mel's forte'."
I have to agree as well. That's exactly how I have felt from the beginning of the merger proceeding.