When Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. announced their plans to merge, no one expected the process to be easy. But what I don't think anyone expected, was for the process to take so long.
Oh sure we knew there was trouble when the preliminary review process dragged on to the point that it earned the dubious distinction of the longest application-to-clock delay in FCC history. But that simply meant that the Commission was dragging its feet in starting its unofficial shot-clock - a timeline that made no difference anyway, since the FCC blew past the deadline regardless.
But the Department of Justice had already begun its process long before. XM and Sirius even certified their compliance with the DOJ's Second Request back in early September, causing industry experts to predict a decision as early as October (the Second Request compliance usually triggers a 30-day clock).
So here we are, 342 days later, and still no decision in sight.
Take a look at the graph above, mergers with far bigger valuations and/or far more monopolistic concerns, were decided upon earlier than the XM-Sirius merger. That graph illustrates the length of time from when a merger was announced, to when a government body actually made a decision.
And remember, Sirius-XM haven't had a decision yet, so that red bar will continue to grow.
It's sad, because in the case of Whirlpool-Maytag, the washer/dryer market was consolidated to a 70% share and it was ultimately approved by the FTC. In the case of Whole Foods-Wild Oats, the FTC charged that prices could go higher, while quality and service could get reduced - but that deal ultimately went through - in almost half the amount of time that Sirius-XM have been in limbo.
Need more examples? The FCC approved the AT&T-Bellsouth merger (valued at a whopping $85 billion - Sirius/XM is estimated to be 10% of that), which controls 22 states, and includes local phone service to 70 million residents - in some states, it made AT&T the only choice for business access services. Google's purchase of DoubleClick combined the two largest online advertising distributors - which was criticized for hurting competition by two companies that are no stranger to antitrust concerns: Microsoft and AT&T - and it was ultimately approved as well.
Even EchoStar-DirecTV, arguably the most similar to the Sirius-XM merger - and was ultimately denied by the FCC - took less time to come to a decision than the satellite radio merger.
Echoing the sentiment of others: it's time for the government to come to a decision. Whether it be to approve or deny the merger, the DOJ and the FCC need to stop stalling, and start acting. Not only investors, but also consumers and especially employees, of both Sirius and XM are suffering at the expense of the government's indecision. And this constant state of speculation needs to end.
Make the decision, and let's move on.
Maybe the authorities have looked at the apparent insanity of the XM BOD and figure perhaps they'll come to their senses and walk away once the deadline expires?
That XM's management agreed to a 4.6:1 ratio is strongly suggestive they were under the influence or temporarily insane with the deal was struck. Maybe DOJ/FCC think the problem will go away if XM is given a chance to get out of this mess at the end of a year.
One can only hope.
Geez Stack ....who was insane? Not the XM BOD. The 4.6 : 1 ratio is a gift. The current pps ratio is 3.7 : 1. Thats a premium of 24%. Go out and buy some XM stock, write some covered calls, buy some puts and trade them out after the merger pop.
Excellent piece Ryan. Media starting to apply some pressure for a decision. I hope some big newspapers pick up on Cramer's piece and your piece.
Good read...
I do think that from the beginning we were told how long this would take. it was said that hopefully, it would be finished by the end of the year. ...that it could spill over into 2008. It has done that, but I am not reading anymore into it other than this is how long it has taken.
The copmplexity of this merger far exceeds mergers of like industries where there was little opposition, The opposition to this merger has been fierce. So too, the proponnents have been unrelenting in voicing their opinions.
This was never just abouit sirius and xm merging. This was always about redefining the audio market and competitors...not just SDARS . We have yet to see the concessions that will IMO be a part of this merger approval...we may have seen a couple, but the totality of the policy, rule, and landscape changes of broadcasters is bound to be affected in not so subtle ways.
It is just around the corner now. I give it no more than 3 weeks.
JMO
The only reason this merger has been opposed so vehemently is due to the interests of competitors.
The only reason this merger has been opposed so vehemently is due to the interests of competitors.
I'm thinking of a number... 2/19/08... What do you think?? a year later maybe... maybe not.. just thinking...
I think if there was three satallite companies and only 2 of the 3 were merging the decision would come faster. They probally are trying to figure out if they merge if they should have to give up some bandwidth like some groups are saying they should.
>>> This was never just abouit sirius and xm merging. This was always about redefining the audio market and competitors...not just SDARS
You got that right.
But it goes beyond that. For DOJ to approve this merger will set a new precedent, effectively eradicating years of antitrust law. Essentially, the approval of XM and SIRI merging to create an unregulated monopoly sets the antitrust bar for mergers to "nonexistent".
DOJ's antitrust department might as well fire the staff, turn out the lights, and lock the doors, because if they don't challenge this thing, there is NO merger they would challenge going forward.
Stack: For DOJ to approve this merger will set a new precedent, effectively eradicating years of antitrust law. Essentially, the approval of XM and SIRI merging to create an unregulated monopoly sets the antitrust bar for mergers to "nonexistent".
What total rubbish, and again, proves my suspicion about you. Cramer's point about the oil companies merging- and the repeal of the Glass Steagal act, which has done wonders for the mortgage market, thank you- proves this statement to be utterly meaningless. This footdragging is absolute horseshit, and has absolutely NOTHING to do with the merits of the merger, pro or con.
No decision of this kind should take this long- period. The FCC should be sued, and this clown Martin should be hanged.
Damn, Max. Take a xanax.
Is there any known case of DOJ approving a merger between the only two players in an industry without one claiming to need the merger to survive?
Just wondering. Anyone?
FCC stop clock my ass...people should be able to sew them...So many people lost money because they didnt realize the clock was BS. They expected a decision and was told they could expect one by years end. They even noted a potential week for the decision, and kept everyone in the dark.
The wait has nothing to do with the "complexity" of this decision. Its completely the political and special interestes forces that have gotten into the ring. If this merger goes this long and ends up getting denied, I will lose all faith that people in the end will not be corrupt and cave into special interests or powerful lobby groups. I would be fine if they would deny the merger, but did so 150 days ago. letting it drag out this long to me means these powerful opposers have made it difficult and 1. The DOJ is getting there ducks in a row 2. They are going to cave in.. I hope they have the guts to do the right thing after making consumers, investors, and the employees of the two companies go through all this..If they were to deny this based on their definition of a "market" they could have done that in August.. It would be almost criminal at this point..
Stack- please stop- you know the other side of the argument, that Sirius/XM make only a minuscule amount of the listening audience. You choose not to count Ipods, HD Radio, Wi-Fi, and good old fashion radio. Fine, but I wonder, do you even re-write these posts or just cut and paste them from the last time the merger subject was posted.
BigGiantHead- The bandwidth issue is an interesting topic, but it has nothing to do with the DOJ. Furthermore, the FCC has had PLENTY of time to make a decision.
I think there is something else, political, going on with this delay. If you go back and listen to Mel's last presentation at the last media conference (out west somewhere?) he seemed rather agitated by the delay.
Regardless of whether it passes or not, the DOJ needs to make a decision. Otherwise they are taking the business of living up to the reputation of gov't workers, way too serious.
The wait has nothing to do with the "complexity" of this decision...
Really?...Well, I think your suspicion of political and special interest have played a part but no more than any megrer. Everyone always fights to get their piece of the pie...American way dontchaknow... The NAB can be blamed for a large part of the wait for approval. Their early mudslinging and crooked tactics did nothing for their cause but did a lot to jam the gears of progress.
My investment is secure. The wait has had little impact on my ROI. Actually it has helped mine. I last bought the block of shares I own now back in early March of 2007 after swinging some in 2006. ( I have owned SIRI since 2003...a little XM)..This wait has turned my investment into a long term investment thus allowing me the tax break vs a short term trade.
I would have like to have seen this thing over and done by now but for me it has a silver lining. :)
The day the XM/Sirius murge actually happens, is the day that Axle Rose actually releases that stupid fucking Chinese Democrocy album that he's been talking about for 10 years or more. By the time it comes out nobody will really care anymore and the only person who will care is him. Same with the murger. I'm tired of the constant, maybe it'll happen, maybe not, stuff. I want results, Goddamn it!
>>> You choose not to count Ipods, HD Radio, Wi-Fi, and good old fashion radio.
Well, duh. They have not one damned thing to do with satellite radio, are not even remotely similar or related, and nobody else counted them, either, until Mel & Parsons cooked up this hair brained scheme and tried to change 100 years of antitrust law in the process.
The delay is of their own making. Karmazin threatened to sue if the merger weren't approved. The natural response is either "Up yours" or "We better make damn sure we have every"I" dotted and every "T" crossed. If the DOJ doesn't plan to approve, it could very well be using the time to prepare its case. Assuming Karmazin isn't an idiot, one has to wonder if he doesn't have ulterior motives to delay the decision.
>>> The delay is of their own making. Karmazin threatened to sue if the merger weren't approved.
Great point, Rubicon.
Ye of little faith....
Suggesting that Mel with his "I'll sue" statement attributed to this delay or in any other way caused the doj to prepare a case against Sirius is absurd and ludicrous in my opinion.
If you failed to believe and failed to buy stock you will fail to prosper when the outcome of this journey comes to fruition in the form of a newly merged company.
At this point IMO it is a sure thing and shares may still be had in the A.M. at a relatively low price for a short time.
...the return being a sure double IMO.
>>> If you failed to believe and failed to buy stock you will fail to prosper when the outcome of this journey comes to fruition in the form of a newly merged company.
Let me get this straight: You actually bought stock AFTER the merger was announced, and you bought it in Sirius, when there is a 20% arbitrage premium on XM?
N2DEEP, I'm thinking you're N2DEEP. As in over your head.
I had a toyota 4runner with no satradio. I listened to Terrestial radio and CDs..I got a chevy tahoe with a CD Player, Terrestial. XM, and ipod jack. I now only listen to Sat radio and my ipod.. My music taste hasnt changed. What I like has not changed. I do not listen to music more or less then i used to. Now would you think that maybe defines a market in its purest sense....that took me 9min to figure out..that gives the DOJ 350 more days to work out the details..geez
I had a toyota 4runner with no satradio. I listened to Terrestial radio and CDs..I got a chevy tahoe with a CD Player, Terrestial. XM, and ipod jack. I now only listen to Sat radio and my ipod.. My music taste hasnt changed. What I like has not changed. I do not listen to music more or less then i used to. Now would you think that maybe defines a market in its purest sense....that took me 9min to figure out..that gives the DOJ 350 more days to work out the details..geez
I had a toyota 4runner with no satradio. I listened to Terrestial radio and CDs..I got a chevy tahoe with a CD Player, Terrestial. XM, and ipod jack. I now only listen to Sat radio and my ipod.. My music taste hasnt changed. What I like has not changed. I do not listen to music more or less then i used to. Now would you think that maybe defines a market in its purest sense....that took me 9min to figure out..that gives the DOJ 350 more days to work out the details..geez
I had a toyota 4runner with no satradio. I listened to Terrestial radio and CDs..I got a chevy tahoe with a CD Player, Terrestial. XM, and ipod jack. I now only listen to Sat radio and my ipod.. My music taste hasnt changed. What I like has not changed. I do not listen to music more or less then i used to. Now would you think that maybe defines a market in its purest sense....that took me 9min to figure out..that gives the DOJ 350 more days to work out the details..geez
I had a toyota 4runner with no satradio. I listened to Terrestial radio and CDs..I got a chevy tahoe with a CD Player, Terrestial. XM, and ipod jack. I now only listen to Sat radio and my ipod.. My music taste hasnt changed. What I like has not changed. I do not listen to music more or less then i used to. Now would you think that maybe defines a market in its purest sense....that took me 9min to figure out..that gives the DOJ 350 more days to work out the details..geez
I had a toyota 4runner with no satradio. I listened to Terrestial radio and CDs..I got a chevy tahoe with a CD Player, Terrestial. XM, and ipod jack. I now only listen to Sat radio and my ipod.. My music taste hasnt changed. What I like has not changed. I do not listen to music more or less then i used to. Now would you think that maybe defines a market in its purest sense....that took me 9min to figure out..that gives the DOJ 350 more days to work out the details..geez
I had a toyota 4runner with no satradio. I listened to Terrestial radio and CDs..I got a chevy tahoe with a CD Player, Terrestial. XM, and ipod jack. I now only listen to Sat radio and my ipod.. My music taste hasnt changed. What I like has not changed. I do not listen to music more or less then i used to. Now would you think that maybe defines a market in its purest sense....that took me 9min to figure out..that gives the DOJ 350 more days to work out the details..geez
I had a toyota 4runner with no satradio. I listened to Terrestial radio and CDs..I got a chevy tahoe with a CD Player, Terrestial. XM, and ipod jack. I now only listen to Sat radio and my ipod.. My music taste hasnt changed. What I like has not changed. I do not listen to music more or less then i used to. Now would you think that maybe defines a market in its purest sense....that took me 9min to figure out..that gives the DOJ 350 more days to work out the details..geez
I had a toyota 4runner with no satradio. I listened to Terrestial radio and CDs..I got a chevy tahoe with a CD Player, Terrestial. XM, and ipod jack. I now only listen to Sat radio and my ipod.. My music taste hasnt changed. What I like has not changed. I do not listen to music more or less then i used to. Now would you think that maybe defines a market in its purest sense....that took me 9min to figure out..that gives the DOJ 350 more days to work out the details..geez
I had a toyota 4runner with no satradio. I listened to Terrestial radio and CDs..I got a chevy tahoe with a CD Player, Terrestial. XM, and ipod jack. I now only listen to Sat radio and my ipod.. My music taste hasnt changed. What I like has not changed. I do not listen to music more or less then i used to. Now would you think that maybe defines a market in its purest sense....that took me 9min to figure out..that gives the DOJ 350 more days to work out the details..geez
I swear that was an accident...all though maybe the DOJ will get the point..
I love how Stack etc. claim that this is an "unregulated monopoly, with, assumingly, a straight face. But nobody seems to be able to answer the question as to WHAT they would have a monopoly on. Howard Stern? No, that's not exactly a monopoly, unless you figure that the Yankess have a "monopoly" on Alex Rodriguez. Commercial-free music? No, I'm pretty sure Apple, Slacker, cell-phone radio, and subscription internet radio have that covered. Live? No, terrestrial radio is live with just about anything important and local. Nationwide? Sorry, Apple and internet radio got you covered.
So does the fact that, for some people, they are slightly more convenient give them some kind of real monopoly power? Yeah, that's realistic, especially when you consider that XM lost 17k net retail subscribers last quarter. Sounds like a powerful "monopoly" to me.
Happy trails, Stack.
>>>> But nobody seems to be able to answer the question as to WHAT they would have a monopoly on.
I've answered the question 500 times.
They have a monopoly on 170 (or 130) channels of broadcast commercial-free music, real time news, talk and sports, all available on a nationwide basis from a single provider for a monthly subscription fee.
Nothing complicated about that. There is no other place you can get this product. You can have an iPod, which is not real time, which is not broadcast (and therefore means you have to own/license the music), which does not provide live sports, talk or news content. Or you can have terrestrial radio, which doesn't have commercial free music, lacks anything approaching the selection offered by sat radio, and cannot provide broadcasts of the entire MLB/NFL schedules.
That's not everything, but these items taken alone make sat radio a monopoly with NO suitable substitutes.
I still believe the government will use the Echostar/DirecTV decision as precedent. Sat TV competed with cable and OTA TV as well as VCRs and DVDs at that time, yet the merger was still denied. I personally think this decision will go the same way. If the merger were going to happen, it should have already been approved.
>>> Sat TV competed with cable and OTA TV as well as VCRs and DVDs at that time, yet the merger was still denied. I personally think this decision will go the same way.
>>> If the merger were going to happen, it should have already been approved.
It isn't mentioned much, but I totally agree with you -- it would seem to be a very comparable situation. I'm not sure why the reference to that decision doesn't appear more often.
Don't know about the timing issue -- but it would make sense that the delay is at least suggestive of someone taking pause to consider the downside.
The problem with this merger is that it is claiming indirect competition as a reason for merger approval vs direct competition. Just like Direct TV, they were claiming they were up against indirect competition with VCR and such. It was denied. The XM merger is claiming even more compeitition outside of sat rad. Why does anyone thing the outcome will be any different.
'Also others have written if the govt doesnt allow a merger its the death of sat rad. Well, good. If the technology cant survive on its own, it needs to die and let the bandwidth go to another tech. But in this case, if the companies die its not because of tech, simply bad management decisions.
im thinking howard visits orbitcast..he's mentioned the past 4 stories in order on here
good job ryan,take a bow!
STack, This ignoring "thing" is going great but I will reply to you this time.
You are aware of what I paid for my shares and what I am holding. Please do a little math on my return Stack and again...tell me I could get a better return in one year .We play on diferent ballfields STACK...your perception of investing within my world falls a little short of hitting the mark. Need help doing that math?
"They have a monopoly on 170 (or 130) channels of broadcast commercial-free music, real time news, talk and sports, all available on a nationwide basis from a single provider for a monthly subscription fee."
WOW, based on this retarded explination my brain just died.
you cannot call something "non competition" just because it does not provide a 100% exact copy of the provided services.
the fact is that you can get at least 75% of all of these services on multiple national services that are real time.
there is more then enough competition and other sources i can get the same type of programing if XM/SIRI sats were just to fall out of the sky tomorrow....right?
According to Stacks definition then Ipods dond compete with CD players...my CD player certainly does not have internal memory, nor does it have a touch screen spinny wheel to control the volume..also its not white..so yes they must not compete..
as for the dish/echostar deal that disgruntled ariel cites, lets remember the main sticky point for the DOJ challenge was for rural areas that DID NOT have cable build out and would create mini monopolies in certain areas...what can you draw from that statement? that in the areas where there was coax buildout they DID NOT see a monopoly.....now as for VCRs, you dont need radio to load your ipod, in fact you cant use one to load the other..you can buy your own music, organize it, and play it. How many people did you know who had a VCR, but no TV service? if you want to take my terrestial that would be fine.. And I wouldnt notice...
Watch who you listen too..Ariel has been jaded since XM stock has collapsed and Stack has had the same argument since it was announced...
>>> the fact is that you can get at least 75% of all of these services on multiple national services that are real time.
I like the way you made that claim without even so much as an example to back it up.
So, 75%? Tell me where you can get CNN or C-SPAN radio nationally. Tell me which service, available nationwide, can deliver 70 high quality channels of commercial free music to my car for one monthly fee? Tell me which service allows me to listen to ANY MLB game, or ANY NFL game of my choice, as I drive (actually, they will probably gone post-merger anyway, but the point holds). And please don't come back with some kind of nonsense cell phone related answer. People talk on their cell phones. They don't listen to music on them.
>>>>>And please don't come back with some kind of nonsense cell phone related answer. People talk on their cell phones. They don't listen to music on them...
but, but.. I do.. I listen to many new things on my cell first.. it's amazing what that little thing can do now.. truly amazing!
I have to agree with Stack on this one. All of those things listed can be found on other devices, but it would take 5 to do so. Im not about to go out and buy (read download) 5000 songs to my ipod, buy a slacker portable, subscribe to mlb.com's audio feed, and carry around a portable FM radio with me just in case.
During the summer for example, i head down to my parents beach house quite often and there is no cable tv, high speed internet and barely any FM radio signals in the area (unless you want to hear static-filled country). They have affordable satellite TV (thanks to competition between dish and direct tv) and XM. Services like Slacker would not work there, neither would iTunes unless you want to wait 28 minutes for a song to download), so many of these other "options" described are moot.
You say that if prices are increased then people will just go elsewhere so they will have to keep them the same. Just remember that not everyone has that option. I chose XM over sirius because it was cheaper when I picked a company (9.99 at the time). That is called competition. Had there been one company, charging $16 a month, i would have never signed up and probably would still not be sub.
"That is called competition. Had there been one company, charging $16 a month, i would have never signed up and probably would still not be sub."
Wow. Correct me if I'm wrong, but shouldn't this be a pro-merger argument?
the arguments that you are creating a monopoly against consumers does not make sense. as you said you cant listen to mlb or nfl but unless you have both xm and sirius u cannot do so now xm owns mlb coverage and sirius has nfl coverage. a merger will give consumers both options plus many more. the fact that both systems carry different programs exclusive to themselves already keeps programming away from consumers.
as i understand antitrust it is in place to aide consumers the withholing of this merger is hurting consumers that would like to have all available programming. i cant watch hockey in phila because comcast cable owns the flyers and will not let any other carriers broadcast their games. that is allowed although comcast cost almost double any other available television provider with no problems by the fcc or doj
if you want static free commercial free radio it is available on hi def radio which is being offered by terrestrial radio, if you want al your sports they are available on tv satelite radio does have competition and the main part of their competition is offered to the public for free
so i really dont see the problem allowing this merger except from terrestrial radio lobbyist who are losing money due to advertising dollars not a concern for the consumer
"So, 75%? Tell me where you can get CNN or C-SPAN radio nationally."
Internet, TV, Cable......
http://www.cnn.com/audio/radio/winmedia.html
http://www.c-span.org/watch/
Since you apparenty dont understand content vs delivery.....show me where i can get rush anywhere but radio and his pay web site. OOPS we better break up testicle radio as a monopoly NOW!!!!
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"Tell me which service, available nationwide, can deliver 70 high quality channels of commercial free music to my car for one monthly fee?"
HD RADIO, regular radio.........celluar companies (of course they refuse to add content but this is not Sat Radio's fault....they can do it so they are competition)...
but they charge you in the form of commercials.....so we would not call it a monopoly if regular radio instead charged you a monthly fee instead of commercials? how stupid can you be?
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"Tell me which service allows me to listen to ANY MLB game, or ANY NFL game of my choice, as I drive "
This is not Sat radio's fault, this is MLB/NFL rules where only a local game can be broadcast on local radio/tv.....but it can be done if they negotiate with the MLB/NFL....so its competition.
So are you trying to say that sat TV is a monopoly because they allow you to see EVERY MLB/NFL game but you can only get to see 4 at the most on regular TV. Should ABC/NBC/FOX not sue to break up this SAT TV monopoly!!!! where else can i sit on my fat ass in front of the tv and see EVERY MLB/NFL game?
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"All of those things listed can be found on other devices, but it would take 5 to do so"
so this is what is called COMPETITION. competition does not need to be a SINGLE source. yes that single source sure makes it easy, but it does not limit consumer cost.
being able to listen to content "live" does not limit consumer choice.
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"i head down to my parents beach house quite often and there is no cable tv, high speed internet and barely any FM radio signals in the area "
So wait because the local cable/phone company decided not to build out this makes sat radio an monopoly? so if a small town like where my mother lives upstate, has only 1 gas station for 55 miles...mobil. THIS MAKES MOBIL A MONOPOLY...QUICK BREAK THEM UP...
no, no one else chose to deliver services to the area, but there are delivery avenues avalible and if the market wanted another it could build up and start there in weeks.
this is the point, just because NO ONE ELSE CHOOSES to deliver the same services EXACTLY the same as sat radio....does not make them a monopoly.
you watch if this merger goes through you will see more national type delivery networks that charge a monthly fee..
Next Question
I think MarkS had the strongest argument for the merger when he said, 'I chose XM over sirius because it was cheaper when I picked a company (9.99 at the time). That is called competition. Had there been one company, charging $16 a month, i would have never signed up and probably would still not be sub."
So you are willing to pay $12.95 per month, but if this "monopolistic" company raised the price to $16 you would refuse to subscribe. How would you obtain your audio entertainment without satellite radio? Or would you just sit there in complete silence?
It would be interesting to see an estimate of how many subscribers Sirius and XM would lose or gain as the price for subscriptions increased or decreased. This should be the test for the Department of Justice to determine if Sirius and XM would have a monopoly. Or maybe you could already determine that it would not be a monopoly by examining the fact that approximately half of the car owners refuse to pay for the service after their free trial ends.
now were at day 440