Bear Stearns: DOJ OK for Sirius, XM coming soon
- From: marrone <marrone.m@xxxxxxxxx>
- Date: Fri, 30 Nov 2007 09:50:49 -0800 (PST)
http://www.marketwatch.com/news/story/bear-stearns-doj-ok-sirius/story.aspx?guid=%7B9E9DDBC5%2D8777%2D43BC%2D82BF%2DD9A5C518A5A4%7D&siteid=yhoof
Bear Stearns: DOJ OK for Sirius, XM coming soon
By David B. Wilkerson, MarketWatch
Last update: 11:43 a.m. EST Nov. 30, 2007
CHICAGO (MarketWatch) -- Shares of Sirius Satellite Radio and XM
Satellite Radio advanced after Bear Stearns told clients that Sirius'
$13.6 billion acquisition of XM could be approved by Department of
Justice officials as soon as Friday.
Sirius (SIRI:
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SIRI 3.83, +0.31, +8.8%) shares were up 4% at $3.66, while XM (XMSR:
xm satellite radio hldgs inc Last: 15.90+2.16+15.72% XMSR 15.90,
+2.16, +15.7%) stock added 8.7% at $14.94.
XM signed an agreement in February outlining a sale to Sirius in a
deal that has drawn close regulatory scrutiny. Terms call for Sirius
to pay 4.6 shares for each XM share.
In a research note, Bear Stearns analyst Robert Peck said that while
"the final outcome remains uncertain," the DOJ is unlikely to block
the transaction, based on the premise that XM and Sirius compete less
with each other than with traditional, terrestrial radio.
The companies have said all along that their market should not merely
be defined as satellite radio, since they must compete against all of
terrestrial radio, as well as Internet radio, audio from satellite and
cable television systems, music download services and other media.
Peck said evidence has emerged that, "given high switching costs,"
consumers responding to a price hike by either XM or Sirius would be
more likely to switch to traditional AM and FM stations rather than
switch to the other satellite radio operator.
Once the DOJ has made its determination -- possibly Friday or Monday,
according to unnamed contacts cited by Peck -- the analyst is
convinced that the Federal Communications Commission will follow suit.
"We expect the FCC decision near year-end," said Peck. End of Story
David B. Wilkerson is a reporter for MarketWatch in Chicago.
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