Status Report: XM Satellite Radio, Sirius

by: The M & A Researcher May 30, 2008 | about stocks: SIRI    
The M & A Researcher

The M & A Researcher

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Regarding XM Satellite Radio (XMSR) and Sirius Satellite Radio (SIRI):

Once again, despite the various and seemingly countless perspectives on recent activity involving the FCC, there is quite literally no substantial developments to report. Commissioner Martin's comments suggesting a decision before the end of June are nearly identical to the rhetoric Mr. Martin has offered since late last year, and should in now way be taken at face value. While a June decision would be in no way surprising, it would be equally un-shocking if the FCC review continued into July, or even August. What seems to be widely overlooked here is that the FCC very likely would have concluded its review several weeks ago if the DOJ had imposed conditions as part of its approval. As this obviously did not occur, the FCC is essentially on its own in reaching what will be a monumental decision. In other words, there is simply no reason to expect Commissioner Martin's latest vague projection to come to fruition.

There has been some renewed effort by intervenors (the C3SR in particular) to encourage the FCC to hold public hearing as part of the FCC license review. At this late stage of the FCC review, a public hearing seems extremely unlikely, although this is very clearly a situation in which such an event would be extremely helpful to all interested parties, and the public in general. If the FCC were to hold a public hearing, as it did in the latter stages of the GMH-DISH transaction ( the hearing designation in that case was made just more than ten months into the FCC review), the decision for this review would naturally be pushed back well into the summer of this year.

However, there is currently no indication that the FCC in inclined to designate this case for public hearing and it is presumed that no such inclination will occur this late into the review process.

Regardless of the continued hype surrounding the FCC review in this deal, the bottom line has been evident since the DOJ decision in March. The FCC decision will come down to the quantity and severity of conditions at the end of the day. As discussed previously, the issues of spectrum divestiture and interoperable devices -- which were in turn highlighted in reports last year -- are considered by this publication to be the primary concern for the successful completion of this transaction.

If the FCC demands concessions in both areas, there continues to exist a fairly high chance that the deal will be terminated -- as suggested by Mel Karmazin in recent comments. It must be presumed that the FCC and companies are currently engaged in advanced discussions involving concession demands/limits, and that the continuation of intervenor participation is a necessary part of these discussions, at least from the perspective of opponents.

A final FCC decision will only be made within the next month if the companies are willing to accept what are likely to be major concessions or if the companies are somehow able to exert more influence on the review process than the immense third-party influence that has evolved. While this publication continues to anticipate FCC approval in light of DOJ approval, the chances of unconditional (or only on conditions proposed by the companies) approval appear to exceedingly small, if not non-existent.

In terms of odds, the current assessment is a 70% chance of conditional approval accepted by the companies; a 25% chance of conditional approval not accepted by the companies; and a +/-5% chance of the FCC declining the license transfer outright. The final FCC decision is currently expected before the end of June, but again, this is highly tenuous under the circumstances.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.

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This article has 143 comments:

  •  
    May 30 02:49 PM
    "there is quite literally no substantial developments to report." ???????????? Y ARE YOU WASTING MY TIME?
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  •  
    May 30 03:03 PM
    at this point only one conclusion can be rendered. The FCC is in no way interested in saving these two companies. They certainly could have come up with conditions by now, but prefer to starve out both companies in the interest in public radio. In so many ways this reflects the incompetence and greediness of our government and the negative influence of special interests. The NAB will resume its monopoly on radio and many in the FCC will profit from their handshake deals.
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  •  
    May 30 03:12 PM
    There is a 75% chance that no one will be surprised by this posting, a 25% chance that someone may find it interesting and a +- 5% chance that no one will care.
    Reply | Link to Comment
  •  
    May 30 03:14 PM
    siri needs to get out before xm knocks em back to being a billboard stock. anybody that buys siri before the merger and it will happen should go back to the penny stock market with em
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  •  
    May 30 03:19 PM
    My goshhhhh!!! this has been so painful to follow and wait. This is typical politics in action or lack of. Tell me there answer is that they have other more important issues consuming the FCCs time. Please, they must have an excuse. If any other paid business worked at this pace, they would be out of business or fired. Oh ya, we pay them as tax payer, meaning they can take their sweet time on our dime, listen to, and be woohed by lobbyists. Enough milking it and make a decision.
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  •  
    May 30 04:15 PM
    I did not even read his article, but let me guess he said absolutly nothing again.
    Reply | Link to Comment
  •  
    May 30 04:19 PM
    Absurd arcticle. The problem lies with the chairman, Kevin Martin, and his failure to exert his authority. I see now why many were seeking his ouster previously.
    Reply | Link to Comment
  •  
    May 30 04:20 PM
    in 5 years satellite radio will be obsolete....wifi will take them out....hold on to your money and get it out of the satellite merry-go-round!
    Reply | Link to Comment
  •  
    May 30 04:48 PM
    M & A Researcher.....From your own BIO you claim that "... is a daily publication dedicated to providing in-depth research, data compilation, news coverage, and FACT BASED analysis of corporate merger and acquisition transactions for the....." Are you kidding me?

    Do you know who C3SR is? I have a hunch you know who they are better than your willing to admit. How dare you even cite them in your reporting. Just because they manage to get their communications published on the FCC site doesn't mean they deserve serious consideration for their, "Late In The Game" requests.

    Have you looked into their funding and mission statement, or do you just assume that they are a valid concern, that we should all pay attention to? Please... Do you guys do anything over there at M & A that even remotely resembles research?

    As I understand C3SR, as reported by a legitimate and unbiased researcher, Tyler Savery from "SiriusBuzz"... C3SR claims a mission that says " they are a satellite radio consumer advocacy and watch group" that thinks it's OK to have the FCC not only deny the license of these companies, Sirius and XM, but because they have not complied with interoperability requirements, pull their existing licenses. Now that's what I call a real "Consumer Friendly" agenda.

    As a consumer, subscriber, and investor, I publicly denounce C3SR's actions and claims that they represent me in any way, shape, or format. If they further claim to represent my interests as a consumer, or subscriber, I might have to find a lawyer , like the one GTP's use to file a class action lawsuit against them. They not only do not represent my interest, but I am sure that they are misrepresenting their own intentions. Be fore-warned C3SR...and consider yourself notified of my intent. I'm sick of all the BS from idiots that are claiming to represent my and consumers interests. i am also sick of folks like yourself that give them relevance without doing any research. You are all costing the companies seeking this merger and investors and consumers who want this merger and technology, that they are willing to pay for, a major inconvenience and a loss of tremendous wealth.

    Any Lawyers out there that want the case......

    I wonder who really funds and supports C3SR's efforts. Calling for a Public Hearing Indeed... Try to call C3SR, try to get them to return any communication at all, Try and Find ONE REPORT or SURVEY that they have conducted to find out what their constituency, us consumers, really want and need from this deal. Now that would be RESEARCH. Now if the FCC follows their demands I'll have no satellite service at all... I'm just so glad the we as subscribers, and by the way consumers, we have folks like C3SR watching out for our well being. Just like your insightful research.
    Reply | Link to Comment
  •  
    May 30 05:06 PM
    M & A Researcher.....nothing personal, just business, do some research. Seeking Alpha you should better "Vet" these authors.
    Reply | Link to Comment
  •  
    May 30 05:26 PM
    ricky....if you understood the technology better you would know that "wifi" and its inevitable expansion and free access, is going to be the median that makes satellite radio truly portable. Wifi will enable you to get sat rad indoors without "line-of-site&quo... to the satellite, a current frustrating requirement to current users. Do yourself a favor and take some money you can afford to lose....and buy some Sirius now..you will not be sorry in 5 years.
    Reply | Link to Comment
  •  
    May 30 10:14 PM
    Do America a favor.... write your congressman calling for Brownie Martin's firing. I have, and it felt good doing my public duty to that public doo-doo.
    Reply | Link to Comment
  •  
    May 30 11:55 PM
    RE: Cos1000, YOU NEVER DISSAPOINT. Clear, concise, factual, well researched, and to the point. Well Said. Thanks. Long siri!!!!!!!!!!!!!!
    Reply | Link to Comment
  •  
    May 31 01:22 AM
    Now days every agency in the government has to be the final word. As much as I respect the FCC, why are they wasting tax payer money on a xm/sirius merger. JUST DO IT. No one and I mean No one has a clue as to what will be it's effect. Let these hard working entreprenuers who had a dream go somewhere that all others feared to tread have their way. Let the dogs who now want to jump on xm/sirius shirt tails to steal some profit that they never earned suck wind or air space as the case may be. FCC ... get it done, and let the dogs lick their wounds, after fighting over the scraps later.
    Reply | Link to Comment
  •  
    May 31 02:26 AM
    cos1000, I liked your comment. I would just add that when you say your interest, That you could very well say all consumers of satellite radio. The reason is as you said, to pull both licenses does not help any consumers of satellite radio, in regards to ether way they feel on the merger for or against. I do think C3SR, Did have a survey done by NGR Research Group. The interesting thing about it was that out of the 21 questions asked not one question on that survey asked: DO YOU SUPPORT THE MERGER? You would think that that would be the first question wouldn't you.

    I once again feel, I have to say this. To all that want to blame K. Martin why dont you look into who is really holding the merger up. What are you going to say, if the vote comes down to a 3 to 2 vote with the 2 democrats being against. If you want to do some good I would suggest that you write the ones that are against it and not the ones that are for it. It just seems to be the intelligent thing to do. Here would be a good one to Adelstein. Tell him it is not his job to look into why the DOJ approved the merger without concessions, like he said, he thinks it is his responsibility to do.
    Reply | Link to Comment
  •  
    May 31 09:45 AM
    163888...I would be interested in reading the NGR survey...do you have a "link"? By the way I did find some info on XM's 10-Q relating to your conversation with yoyoYo. I posted it back on that May 20th article.
    Reply | Link to Comment
  •  
    May 31 10:13 AM
    When will the beating of this dead horse stop? Martin isn't making the decision, the NAB made the decision. The decision was made shortly after the "Whole Foods" decision and court action. Martin realized that a negative decision had a high probability of being overturned, a positive decision would not serve NAB. The best route to take, stall until the end of his term. These monthly pronouncements are just part of the plan. DOJ didn't give them the cover they hoped for. This action weakens both SIRI and XMSR or kills either one or both. For Martin and the NAB, mission accomplished.
    Reply | Link to Comment
  •  
    May 31 11:04 AM
    This is another example of Big Governments inaction. All over approving the combination of two companies in the same line of business. There are supporters on both sides. Imagine what health care will be like when it gets nationlized (federalized). There is no incentive to improve, because it's the only FCC we have. It's not like we can take our business elsewhere, right?
    Reply | Link to Comment
  •  
    May 31 11:17 AM
    Just a little more info on C3SR. "On January 12,2007, a group of law students at George Washington University in Washington, D.C. launched a new consumer advocacy group dedicated to ensuring continued competition in the digital satellite radio industry. The Consumer Coalition for Competition in Satellite Radio (C3SR), a student-run organization created on behalf of the 13 million satellite radio subscribers, has been spawned in response to rumors about the potential merger of XM and Sirius Satellite Radio." That's right from C3SR's website link. Any Questions you can call Chris Reale Tel # is (202) 446-8340 and leave a message. Please, Let us know what he has to say. This information was in their Press Release section in their Press Release, stamped for Immediate Release.

    A quote from their Press Release from Chriss Reale "Hopefully, when, and if, Sirius and XM announce a merger agreement and pursue regulatory approvals, we will have enough support and momentum to ensure that existing subscribers don't get the shaft". At the time of release Reale, was an experienced Washington, DC advocate and second year law student at GWU.

    I just wonder what happened to their momentum and who is behind their new found religion.
    Reply | Link to Comment
  •  
    May 31 01:33 PM
    It appears that the merger is now officially a political football. The Democrats want the deal killed just to burnish their "pro-consumer&quo... credentials. The Republicans are terrified of the November election, a likely tsunami that will wash their party to super-minority status. Don't look to them to defend the merger lest they get tagged as "anti-consumer / pro-big-business"... I think it wise to stay away from XM / SIRI. The Democrats are calling the shots.
    Reply | Link to Comment
  •  
    May 31 05:10 PM
    cos1000, Go to Sirius Buzz on MERGER NEWS, go back to the Apr 4th article by the master of information on SIRI, Tyler Savery and you will see the survey.
    Reply | Link to Comment
  •  
    May 31 05:43 PM
    cos1000, Just saw what your comment was on the other article. Nice one on information. The only question I have is, where Is the additional 1.32 in loss of ARPU due to. The cost to ARPU, SIRI has stated is a small portion after multi year plans and family plans, and that they are including the around 860,000 subcribers they dont get paid for but include them in ARPU. The original question on this was, why is XMSRs ARPU almost as bad as SIRI, because If both have about the same metrics for including in their ARPU. XMSR must have something else because they are not counting almost 900,000 subs that they are not getting paid for in their ARPU, that SIRI is.
    Reply | Link to Comment
  •  
    May 31 09:34 PM
    163888....I posted another comment on the 5/20 article, not much
    help on answering the ARPU question between the two companies. I have the company required reporting information and the data for ARPU is a "black box" computation that they are not providing all the detail to. ARPU is not a GAAP metric, its a company / industry operating measure that truly does not tell the whole story.

    Thanks for the reference to Tyler's SiriusBuzz article. He has a link to the FCC document from C3SR that provides the survey conducted by NGR, the Canadian Based Research firm utilized to conduct the meaningless survey as it is. No conclusions, no meaningful data as it relates to the merger, or maybe anything else.

    The more I look into the facts, the more disgusted I get with the Opposition's argument to this merger. They stand behind false intentions about giving a damn about consumers, competition, and the public interest. The fact of the matter is the Opposition to this merger, is the competition. They have their own self interest and profits in mind not consumers or the publics interest.

    I do in fact believe that this merger will go through but not until all the posturing by the self interested parties have been given their due and the light of day can be shone on all of their arguments. In this way a judicial or legislative overturn will not be possible....
    Reply | Link to Comment
  •  
    Jun 01 12:17 AM
    Like I said....The merger will happen by June 30th! No worries...just wait & see!

    Reply | Link to Comment
  •  
    Jun 01 12:24 AM
    A letter to Chairman Martin I sent today:

    Dear Mr. Kevin Martin,

    I understand it is your responsibility as Chairman of the FCC to make sound decisions, and at times it takes longer than what many would hope for. However, here's where I believe the problem and issue is in concerning this merger. First, this is a pay-for-subscription service. Not one person in the U.S. is forced into buying it whatsoever. As an example, the reality is that like cable television, satellite radio companies (current and future ones) will have the opportunity to continue business, or start a new business (capitalism at work). Do smaller cable companies like Cox/MediaCom just simply give up and shut down because Comcast has more customers. No. This is a pay service. Plain and simple. The FCC belongs in the public stations (i.e. AM/FM radio, regional television). I am only left to wonder who's interests are best being served here. It is certainly not the customer. As many would vouch for, I firmly believe that it's in someones back pocket with pull and clout. Can you honestly disagree with this statement? I am very much interested in a response to this question. As an American taxpayer, I find this process disgusting and downright immoral. I highly anticipate a class action suit if this merger is not approved. Thank you for reading this and I do hope to hear from you. Thank you.
    Reply | Link to Comment
  •  
    Jun 01 09:51 AM
    jimmydasaint....I agree with you, but watch for an announcement after their mid June meeting, even though the merger is not on the agenda. I can't beleive that they would want to disrupt the July vacation plans.

    Kevin O. .....The letter should be sent to all of the members, but more importantly to the Democratic members...Good luck in receiveing a response from anyone. My emails were acknowledged as recieved, but no response.

    C3SR survey by NGR occurred when C3SR claimed to represent satellite subscribers. Total subscribers surveyed were 429...that's 429.. when the companies in total had about 15 million subscribers. This is what I mean by showing the light of day on these opponents of the merger and self proclaimed advocates for all of us consumers and subscribers and their noble cause to protect competition.
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  •  
    Jun 01 11:04 AM
    M&A is like the nurse who comes into the room uninvited and wakes you up so she can give you a sleeping pill.

    But referencing C3SR without disclosing who funds C3SR demonstrates either pathetically lazy research or intentional omission of pertinent facts.

    Quoting M&A from March 14, 2008:
    "This will possibly be the final detailed analytical entry for this transaction. " Since saying that, this article marks the 4th time M&A has woken us up to give us another sleeping pill.
    Reply | Link to Comment
  •  
    Jun 02 10:23 AM
    somoene bought the 4,5,6,7 June call strikes in SIRI this morning, what's up with that???
    Reply | Link to Comment
  •  
    Jun 02 11:24 AM
    those trades got busted...nm
    Reply | Link to Comment
  •  
    Jun 02 04:54 PM
    C3SR

    read this interested article... www.orbitcast.com/arch...
    Reply | Link to Comment
  •  
    Jun 02 07:40 PM
    dtam .....thanks, I suspected as much....Again I say with disgust and disdain.....Nice Research M & A!!! And by the way this C3SR supposed news was also carried by PRNeswire and USNeswire via COMTEX another enabling media stream that calls itself news worthy actually published the opening statement to their release as....."Highly Confidential Documents of Sirius Raise New Substantial and Material Issues of Fact" now that's a real head turner.

    Smarty Pants...I love the analogy. Thanks for the chuckle.
    Reply | Link to Comment
  •  
    Jun 03 01:59 PM
    Even though I've lost 50% of my original stake that I put in Sirius and probably a quarter of my own hair along with that. I'm confident that a favorable decision will be ruled in the Sirius/XM courtship by June 30th!

    My concern at this point is not if the merger will go through or not, but how the stock/company's are going to rebound from the FCC/NAB's delay tactics that almost obliterated these company's overall value.

    Will there be a 3 for 1 reverse stock split?
    Will Sirius finally announce a major partnership with Apple or Google?
    Will they finally switch their business model and stop being so damn dependent on both retail & car sales? Don't you think it's time that their partnership apartment starts tot hink out of the box and contact every web company on the net that has over 50,000 + members to try and integrate their services within their online portals to maximize their exposure and increase revenue?
    What about finally opening the flood gates for advertisers to market on their suite of channels?

    I know Mel & crew have been very hush, hush, so they don't say the wrong thing to piss off the FCC, but it's going to take an act of god or Apple type of creative innovation to save this company!

    They've come to far and fought to far to fail......

    Anyways, we've all been stressing out way to much over this marriage, so go to letsgodeep.com on June 5th to participate in our 2nd Home run Derby game for Major League baseball this season ;) It's free to play and I promise it's going to be lots of fun!
    Reply