Bank of America analyst Jonathan Jacoby wrote in a research note today that the "Achilles heel for sat radio" could be the existence of a regulation the requires two satellite radio operators. This could effectively bring a merger between XM and Sirius to a regulatory halt.
Under the FCC's rules auctioning satellite raido's DARS licenses, there are several "safeguards" in place, and one especially where the FCC specifically addresses transfers of the licenses. Here's what it reads (emphasis added):
Transfers. We note that DARS licensees, like other satellite licensees, will be subject to rule 25.118, which prohibits transfers or assignments of licenses except upon application to the Commission and upon a finding by the Commission that the public interest would be served thereby. Even after DARS licenses are granted, one licensee will not be permitted to acquire control of the other remaining satellite DARS license. This prohibition on transfer of control will help assure sufficient continuing competition in the provision of satellite DARS service.
Jacoby notes that the FCC may not be able to simply waive this procedural hurdle - it would have to be formally changed. So not only would the market that satellite radio competes in need to be redefined (is it competitive to terrestrial radio AND digital media like portable music players?), but also the FCC's own DARS license would need to be redefined.
As RBC Capital Markets analyst David Bank points out in a report... the clock is ticking. Bank believes that if a Democratic (or potentially an even less receptive Republican) helmed administration comes into office, it might "offer much greater resistance than the current regulatory framework."
The clock is definitely ticking. Jacoby believes that a merger would have to be announced in the next 4-8 weeks if there's a "reasonable chance of clearing regulatory hurdles" before the 2008 elections. Youch.
What if they merged companies and then split out the video/GPS services as a separate, value-added company? each new company can utilize one of the DARS licenses.
More hurdles the better. I hope they never merge. I would be done with satellite radio if they did.
Allow me not to mince words about JJ ( aka Homer ) and BOA who have lead so people consistently in the wrong direction, for so long.
He's ( Jacoby ) been so very busy talking up XM ( despite the facts ) that his opinion is no longer credible.
The man is brilliant when evaluating numbers in existence, and has an excellent memory. He is less brilliant in long term or subjective thinking... or for that matter to understand how the " real " world works.
I'm sure he is very intelligent and well educated. I am equally sure that if it didn't get calculated by a college Professor, or come pre-assembled, the man is out of his element.
He is not street wise IMHO.
You really think that I'm Jacoby? That's a good one... So you think that Jacoby, I mean -- I'd risk my job as the media analyst for Bank of America to be a regular contributor on a Yahoo and XM411 message board? Okay then...
ROTFLMAO! Turn me in to my bosses at BoA then, see what they say.
BTW, back to reality, I'm not a fan of Jacoby so I do hope you do claim that I'm him. But you better turn in the folks over at the WSJ too, they've also picked up the story about the FCC regulations. Do you think I'm Sarah McBride too?
Funny, this little regulation thing is something that I pointed out 2 years ago... maybe Jacoby has been reading my posts on Yahoo or 411????
Why do you all keep saying you would cancel your service? Somone said it before...who cares it doesnt really matter casue they would pick up thousands more. But why?!?