Bear Stearns: DOJ OK for Sirius, XM coming soon
11:43a ET November 30, 2007 (MarketWatch)
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 shares were up 4% at $3.66, while XM 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.
11:43a ET November 30, 2007 (MarketWatch)
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 shares were up 4% at $3.66, while XM 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.
