Citi Analyst: Sirius-XM Deal Has 60% Approval Shot

By Amy Gilroy -- TWICE, 10/10/2007 6:56:00 AM

New York — The proposed merger between Sirius Satellite Radio and XM Satellite Radio has a better than 60 percent chance of passing federal regulation, according to a report published yesterday by Citi Investment Research.

The report said the merged Sirius-XM would achieve a value cost savings of $7 billion to the companies.

Analyst Eileen Furukawa stated, “We believe the probability of getting regulatory approval has shifted recently in favor of Sirius and XM … We believe that the commentary during the Federal Communications Commission open period was more persuasively in favor of XM/[Sirius] … at the same time, we believe XM/[Sirius’] offering of ala carte pricing including a Family Friendly package, should help to appease FCC regulators.”

The report said, however, that government approval or disapproval of the merger is still uncertain as it “will be strongly politically fueled, particularly as we move toward a presidential election year” and that the National Association of Broadcasters continues an “ardent” lobbying effort against the merger.

Specifically, Furukawa placed the chances of merger approval in the high 60-percent range.

A ruling on the merger by the FCC is expected by early December. There is no set time frame for a ruling on the merger by the Department of Justice (DOJ).

The FCC is charged with determining if the merger would be in the public interest and the DOJ determines if the merger would be anticompetitive.