FCC Commissioner Copps Votes "No" to Radio Merger: No Surprise
FCC Commissioner Copps has opted not to bring a counter proposal to the table, and simply go with a “NO” vote on the proposed Sirius (SIRI) and XM (XMSR) merger.
According to the Wall Street Journal, Copps rendered his decision on Monday, July 22nd. The “NO” vote by Copps represents the first commissioner to go against the proposed merger. The merger now has had three of the five commissioners cast their votes:
- MARTIN - YES
- MCDOWELL - YES
- COPPS - NO
- ADELSTEIN - UNDECIDED
- TATE - UNDECIDED
It is widely anticipated that commissioner Tate will vote in favor of the deal, but wants some “teeth” in the deal to ensure regulatory compliance. Adelstein has offered a counter proposal to the Draft Order Issued by Martin, and has stated he is open to negotiation.
Most who follow the sector believe that Sirius and XM are negotiating with Tate, who in theory would want fewer concessions than Adelstein, in hopes of obtaining the third vote needed.
Market Response
Those that follow the satellite radio equities closely noticed some wild trading Tuesday. Both Sirius and XM dropped like rocks in less than a minute on what appeared to be no news. Then we all saw what happened - FCC commissioner Copps voted against the merger. But why did that cause a drop? Most were expecting Copps to vote against the merger anyway.
The answer could be a simple as the headline attached to the Copps story:
“FCC Member Votes Against XM-Sirius Deal”
Given all of the recent talk about commissioners Tate and Adelstein, it was only natural that people were expecting their votes first. More specifically, people anticipated that the next vote to be publicized would belong to Tate, and that the companies were waiting on “real” negotiations with Adelstein in hopes that Tate would come through with the last YES vote needed. The headline offered no indication of which commissioner voted, and perhaps some assumed that Tate came out against the deal. Had this been the case, it would have been devastating for the equities, leaving all hopes of a merger in the hands of Copps and Adelstein.
The street quickly sorted out that it was Copps that fired his gun while Tate is still exercising her right to remain silent. The equities rebounded, and now once again, we all “Wait on Tate”.
Cowen Analysis
Analyst Tom Watts was quick to the keyboard after it was announced that commissioner Copps had voted no. The analyst noted that the Copps vote was “no surprise”, and that he was still looking to FCC commissioner Tate for the final approving vote on the merger deal.
Watts notes several points which have been oft discussed by this publication, including the fact that it is enforcement issues, and perhaps not more stringent concessions that commissioner Tate is seeking. “The focus remains on Republican Commissioner Deborah Taylor Tate. Her key concern is reported to be the companies' prior violations of FCC rules in their deployment of repeater towers. An announcement of an enforcement action by the FCC came out last Friday, however, the matter has been under consideration by the FCC for some time. We expect the companies to reach an arrangement that could include a fine and/or a timetable for bringing all repeaters into compliance. Such an arrangement should address Commissioner Tate’s concerns, enabling her to vote in favor of the deal.”
Watts calls Adelstein a “fallback option” for Sirius and XM, stating that Adelstein has expressed a willingness to negotiate his proposal. Personally I see Adelstein's proposal as a deal breaker, and he would need to move substantially to come to a deal that the satellite radio companies would feel comfortable with. To his credit, Watts see it more likely that the merger will gain approval with Tate rather than with Adelstein, a position I agree with.
Things seem to be moving fast and furious, so keep your eyes peeled for SDARS merger news.
Catch all of the news of the week on SiriusBuzz Radio. This week's show is Thursday at 9:00 PM EST.
Position - Long Sirius, XM
Get Seeking Alpha Free Stock Alerts by Email!
Get Free Stock Alerts by Email!
ETFs In Focus
-
Editor's Picks
-
Most Popular
- Never Enough Lessons on Forward PE
- Which Candidate Will Get to Spend the $700 Billion?
- How Bad Is the Federal Reserve's Balance Sheet?
- The Burst Commodities Bubble
- Four Ways to Protect Money During the Fallout
- Cap-and-Trade in the U.S.
- Full list of Editor's Picks »
- Cramer: Dow Could Drop Another 14%, Oil's Going to $50 »
- 36 Opportunities for the Beginning of the Bull »
- iPhone Sales Drastically Surpass Q4 Consensus; Apple Reaches 10m Goal »
- Cash Position Best for Apple Investor »
- Why Is Everybody Selling as Buffett Is Loading Up? »
- 25 Cash Cows to Ride Out the Storm- Barron's »
- 3 Stocks That Are Begging To Be Bought »
- The Cramer Crash? »
- Bill Ackman Piled Into Wachovia and AIG Shares »
- Four Energy Bargains »
- Surviving the Financial Nuclear Winter »
-
Long Ideas
-
Short Ideas
-
Cramer's Picks
- Trading During This Crisis
- LTX-Credence Will Have Good News For Investors
- @VIC: Mohnish Pabrai the Dhandho Investor - Interesting Times, Interesting Opportunities
- It Is Darkest Before Dawn
- Intel: Consistent Strength
- Four Ways to Protect Money During the Fallout
- Market Jitters Enable Even Small Investors to Get a Piece of BUD
- Attractive Values - Fast Money Recap (10/7/08)
- Another Analyst Likes Capstone
- Dell Looks Cheap
- Full list of Long Ideas »
- Global Financial Crisis Makes Oil a Great Hedge
- Michael Page International: Stock Down on Market Weakness
- Gaming Stocks Still a Poor Bet - Barron's
- After Coming Rate Cuts, Some Appealing Short ETFs
- M/I Homes: Common Share Price Perplexing
- Trading ERO This Week
- Talk Me Down From the Wells Fargo Ledge
- SKF Regaining Its Old Form?
- Continuing Haircut in DST's Investment Portfolio
- Fortis and Bradford and Bingley Banks Thrown Lifelines
- Full list of Short Ideas »
- Chocolate Lover - Cramer's Mad Money (10/7/08)
- Yield is King - Cramer's Lightning Round (10/7/08)
- Goldman Disses Solar - Cramer's Stop Trading ! (10/7/08)
- Time to Hoard Cash - Cramer's Mad Money (10/6/08)
- Buyers On Strike - Cramer's Stop Trading! (10/6/08)
- Still Bullish on RIMM - Cramer's Lightning Round (10/6/08)
- The Cramer Crash?
- Cramer: Dow Could Drop Another 14%, Oil's Going to $50
- Musical Chairs - Cramer's Mad Money (10/3/08)
- Not Much to Recommend - Cramer's Lightning Round (10/3/08)
- Full list of Cramers Picks »
Trading Center
Hedge Fund Jobs
Job Seekers: Search jobs by category, get job alerts by email or live feed, apply online See full list of jobs »
Employers: See all recruitment options, get applications online or by email Post a job »
This article has 67 comments:
Peace be with you.
this should be are new peramble
Pandora might have an advantage over XM/SIRI for online listeners (i.e. it's free), but most people want mobile radio, meaning in the car and handheld radios.
You're kidding, right?? Obviously you missed the sarcasm in my message. Try turning the monitor upside down and read it again. Perhaps then you'll agree that I'm bunking in the same camp as you.
1) So now that there are three votes does the 10 day clock start or not? No one seems to be able to agree.
2) Shouldn't the FCC have been fining SIRI and XM over the last decade for these violations?
Now as for the violations, it is common from what I understand that the FCC, wait for some time and lets the violations build up until the company needs something from them before they go after them. most of them are small and are arguable, not worth going to court over (Adelsteins comments tell me that). I have read it somewhere I think it was in a Tyler Savery article in the comments section about a terrestrial radio company that had a shit load of violations and the total fines where very small compared to the number of violations.
It's all on Tate and her fines and enforcement. Public Knowledge and Media Access Project filed an ex parte, saying that: 1. "Open Access" is more important than HD chips installed, let the manufacturers decide to add or not. Moratorium of 60 days not 1 year also what their looking for. 2. A oversight authority, assigned by the Commission not the merged entity is required for enforcement. 3. 5% Minority owned Spectrum with 1 programmer per channel, not SIXM controled, is required, 10% if the existing programming offered is included.
Other than Tate's settling out the fines for prior sins, and corrective action time tables, I believe we're getting a glimpse of what the final approval will look like.
pissed
"Instead, it appears they're going to get a monopoly with window dressing. We missed a great opportunity to reach a bipartisan agreement that would have benefited the American people," Adelstein said.
1. Fines and an oversight committee....no problem.
2. Open access....no problem.
3. I see 10% to 12% max on the spectrum set asides...no problem
4. 3 year price cap, no problem....maybe 4 to make Deb look strong...not thrilled about 4 but it's not THAT big a deal
This would be consistent with the "window dressing" Adelturd is complaining about. Given these conditions, this looks like a favorable outcome. I can't believe the companies would have let Adelturd go if they weren't sure they could get a favorable outcome from Tate...so again, this deal is a virtual lock right?
So I'm surprised we aren't seeing better price action...
Get Some
siriusbuzz.com/commiss...
Killerkaul I agree with mudslinger on picking up some XM, spread is down to 11%. As 163888 said it probable will go to around 5 % before the vote is announced and then its gone.
CHICAGO (MarketWatch) -- The Federal Communications Commission is close to approving Sirius Satellite Radio Inc.'s acquisition of XM Satellite Radio Holdings Inc., according to a published report Wednesday.
With two votes opposing the deal and two in favor of it, Republican FCC Chairman Kevin Martin has just about convinced Deborah Taylor Tate, another Republican, to cast the deciding vote that would green light the transaction, Reuters reported, citing an unnamed source familiar with the agency's review of the merger.
An FCC spokesman declined comment.
Thus far, Democrats Jonathan Adelstein and Michael Copps have reportedly voted against the deal, while Martin and Republican Robert McDowell have voted in favor.
Staff members of the Federal Communications Commission backed the transaction earlier in June, culminating a 16-month review.
Martin said he supported the transaction as long as the two companies agreed to certain conditions.
To secure FCC approval of their merger, Sirius (SIRI, Trade ) and XM (XMSR, Trade ) have agreed to a three-year price freeze for consumers, the creation of smaller packages at lower prices, a la carte radio programming, to let any manufacturer make satellite-radio equipment and set aside up to 8% of their channels for minority-owned stations and noncommercial use.
Under one offer the companies announced last July, subscribers would be able to choose 50 channels for $6.99 -- a 46 % decrease from the current standard subscription rate of $12.95. Customers could then add more channels for a minimum of 25 cents each.
The companies also said they would offer a series of "family-friendly&... packages that would allow customers to exclude the racier content provided by shock jock Howard Stern and others.
Supporters of the merger argue that the satellite radio companies don't so much compete with each other as they do with a wide array of audio entertainment, including traditional radio stations, Internet radio, MP3 players and cell phones that play music.
Critics of the deal counter that the combination of Sirius and XM would create a monopoly, and that satellite radio operators flagrantly disobey FCC regulations prohibiting transmissions that interfere with broadcast signals.
Sirius shares were down 1 cent at $2.37, while XM shares were up 6% at $9.64 Wednesday
and this:
FCC Chmn Close To Deal On Approving XM-Sirius Merger -Reuters
Jul 23, 2008 13:31:42 (ET)
The Federal Communications Commission chairman, Kevin Martin, is near a deal to approve a merger between XM Satellite Radio Holdings Inc. (XMSR) and Sirius Satellite Radio Inc. (SIRI), Reuters reported Wednesday, citing a person familiar with the FCC's review. The source said Republican commissioner Deborah Taylor Tate is near to casting the five-member FCC's deciding vote in support of the merger.
Web site: www.reuters.com
WASHINGTON – A tentative deal has been reached by a majority of commissioners at the Federal Communications Commission to approve the merger of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., a FCC source close to the review said Wednesday.
Republican commissioner Deborah Taylor Tate is the only FCC member left to vote on the deal and she is expected to do so shortly, two FCC officials close to the negotiations said. She is expected to sign off on ...
RReagan, as I have said, look at it this way if there is one other good thing that has come from this delay. Is that the 2 FCC democrats just pissed off about 20 to 25 million investors/subscribers, At least half of those were democrats/independents... That along with the oil issue may turn this into a republican year. I am almost happier about that.
According to the Wall Street Journal, FCC commissioner Tate is set to approve the proposed merger of Sirius and XM with a fine of $20 Million fine that is said to resolve several enforcement issues surrounding satellite radio.
Should this news be accurate, the satellite radio companies now have the green light to move forward with their merger.
Once consummated, each share of XM will receive 4.6 shares of Sirius.
Dont worry, but as I said can you see why it may take a while for it to move up, if you are skepical just think about the rest of the people, and you have been here and seen the common sense that I and others including yourself have said.
notsosmart, I know you are a DSX fan (I have seen you on a Seeking Alpha, article, comments section) you got to love that one. This quarters dividend is projected to be .90 to .92 cents a share.
P.S. are you any relation to "notverysmart&quo... Or is that you, and you changed your name?
And to naysayers like The Vicar of Value.....pffft.