XM, Sirius Belligerence up as July Deadline Looms
Fighting over the XM-Sirius merger is in a new phase, with both sides filibustering the FCC on why the merger should or should not be approved, with the satellite operators coming on more aggressively than in the past. Analysts differ on whether the deal is likely to pass regulatory muster.
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Tim Farrar, a satellite industry analyst, said Mon. XM and Sirius are posturing more aggressively in line with a July 9 due date for comments at the FCC. “XM and Sirius have played it slower and quieter and that may be a sensible way to play it,” he said: “Things have moved on a long way. People may have gotten some of the inflammatory rhetoric out of the way and are looking at things in the more dispassionate way the FCC and DoJ have to do.” In contrast, NAB came on “very strong” in its opposition to the merger, he said.
To push the merger, XM and Sirius have put up microsites www.xmmerger.com and www.siriusmerger.com, countered by the NAB’s www.xmsiriusmonopoly.org. Outside NAB’s headquarters building hangs a banner reading, “Do the Math: XM + Sirius = Monopoly.”
XM-Sirius said Monday that Americans for Tax Reform and the 60 Plus Association back the merger. “This merger would create an appealing product for many consumers interested in multiple audio options,” said Grover Norquist, president of Americans for Tax Reform.
Last week XM-Sirius sent the Commission a paper by the League of Rural Voters arguing that the merger lacks market power concerns such as doomed the DirecTV-EchoStar merger. But the league admitted it was giving its imprimatur to a document readied by the satellite companies. “While the FCC raised objections to the DirecTV-EchoStar merger in 2002, none of those objections apply in the case of the proposed satellite radio merger in 2007, because the product markets at issue in each case are fundamentally different,” the report said. Satellite radio is “a small part of the highly competitive and ever-expanding market” for audio entertainment, the report said. “The commission must review the proposed transaction in light of this evidence of intense competition in the audio entertainment market, not in light of precedent from another context.” Niel Ritchie, League executive director, said XM-Sirius paid for the report, then asked his group to endorse it. Richie was willing to do so because he agreed with the conclusions and league was on record in support of the merger, he said.
NAB has been active, publicizing a letter signed by 72 House members urging FCC Chairman Kevin Martin to oppose the merger (CD June 19 p6).
Morgan Joseph said in a research report that Sirius subscriber data could be better than expected second and third quarters. Still, the firm warned, “The probability for merger approval remains small given the stiff opposition from powerful groups like the NAB.” Merrill Lynch said it remains “optimistic” the merger will be approved in late 2007 or early 2008, setting probability of approval at 60 percent.