Satellite Radio To Offer Pricing Details
By Amy Gilroy -- TWICE, 7/19/2007
New York — A spokesman for XM and Sirius said the companies will present more details on a pricing plan for satellite radio service under a merged Sirius/XM in the near future.
Analyst Robert Peck of Bear Stearns expects an announcement on pricing will be made prior to July 24, when the “reply period” ends, which is part of the Federal Communications Commission’s (FCC) comment period on the merger.
The price of satellite radio service by a merged Sirius/XM is considered important because lower pricing might signify the deal would be in the public interest, a key contingent to federal approval.
Analyst April Horace of Janco Partners noted, “Clearly the concept of lower price or giving a more basic package will be appealing to the FCC. Using the words ‘a la carte’ [programming] will be appealing because the FCC has been pushing the cable industry for that.”
She continued, “So the question is … will the FCC make the conditions of approval so onerous that the merger may not make any sense?”
A recent report by Bank of America analyst Jonathan Jacoby this week said that if Sirius CEO Mel Karmazin “clearly delineates concessions,” it could improve the chances of the merger receiving FCC approval.
Jacoby placed the current chances of a successful merger at 35 percent, up from 30 percent, due to “an effective” lobbying campaign recently launched by XM and Sirius.
Bear Stearns continued to state it believes the proposed merger will pass federal regulations provided that “political forces” don’t prove “more powerful than the merits of the deal.”
But Horace notes, “I don’t think anybody has a real handle on whether it will pass or not pass.”
The Jacoby report cautioned that numerous delays in the FCC regulatory process, due to end in about 140 days, could derail the merger.
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