Sirius, XM Decision Drags On
By Steve Smith -- TWICE, 5/5/2008
The wheels of justice move slowly, or so the saying goes. And in the case of the proposed merger of Sirius Satellite Radio and XM Satellite Radio, it took more than a year for the Department of Justice (DOJ) to clear the merger in late March, saying that the deal is not anti-competitive.
The DOJ comparatively sprinted to its decision, when you consider that as of Thursday, May 1, the Federal Communications Commission (FCC) has still not issued its opinion on the matter.
Many of us were reminded by analysts who follow such rulings that the FCC rarely disagrees once the DOJ makes a decision. But while the FCC rarely disagrees with DOJ, no one said that the FCC ever acts quickly in such cases.
XM and Sirius acknowledged this last week because both postponed its annual shareholder meetings set for this month waiting for the FCC to make a decision. (Sirius had a May 20 date for its annual shareholder meeting while XM's was supposed to be May 23.)
What's exasperating about all this is that the FCC is expected to meet on May 14, but published reports said that the merger isn't likely to be on the agenda.
If those reports are accurate, shame on the FCC. So does that mean it will be June, at the earliest, when the FCC will issue a ruling?
If the merger isn't on the May 14 agenda as yet, there may still be hope we hear something from the FCC. Why? Informed observers of the agency have indicated in the past that Chairman Kevin Martin's meetings are less structured than previous heads of the FCC. Some at XM and Sirius have to hope that at the last moment the merger may come up for discussion.
The merger announcement in January 2007 put a pall on the marketplace and made some consumers hesitant about backing either company.
Both XM and Sirius, and their retail and supplier partners, felt that hesitation by consumers. Granted, XM and Sirius signed an agreement that they wouldn't merge years ago, and I'm not going to dredge up all the pro and con arguments about the deal.
And everyone has to realize, like it or not, that Washington has its own schedule that does not concern itself with market flux. But someone should remind the FCC that 16 months is 16 months and that they have had plenty of time to come to a decision.
Only terrestrial broadcasters seem to have anything to gain by further delays, namely the National Association of Broadcasters (NAB), who has been against this deal from Day One. And as we all know, the NAB, especially during an election year, has plenty of friends in D.C. who have been peppering the FCC with pointed suggestions about this issue.
Both Sirius and XM are still optimistic about the merger's chances. Both continue to add new content offerings to their subscribers. And, in what has to be considered a vote of confidence, Directed Electronics last week extended its distribution agreement with Sirius from August 2008 to January 31, 2009.
Hopefully the FCC will have come to some decision before Directed's new deal with Sirius comes to an end.
