OK, technically, they didn’t approve it, they choose not to oppose it, but to subscribers this may be a difference without a distinction.  Here’s the press release from Sirius.  http://investor.sirius.com/ReleaseDetail.cfm?ReleaseID=301291

SIRIUS Satellite Radio (Nasdaq: SIRI) and XM Satellite Radio (Nasdaq: XMSR) today announced that the U.S. Department of Justice (DOJ) has informed the companies that it has ended its investigation into the pending merger of SIRIUS and XM without taking action to block the transaction. This decision means the DOJ has concluded that the merger is not anti-competitive and it will allow the transaction to proceed. SIRIUS and XM each obtained stockholder approval in November 2007. The pending merger is still subject to approval of the Federal Communications Commission.

Here’s the DoJ’s spin…http://www.usdoj.gov/opa/pr/2008/March/08_at_226.html

The Division’s investigation indicated that the parties are not likely to compete with respect to many segments of the satellite radio business even in the absence of the merger. Because customers must acquire equipment that is specialized to the satellite radio service to which they subscribe, and which cannot receive the other provider’s signal, there has never been significant competition for customers who have already subscribed to one or the other service. For potential new subscribers, past competition has resulted in XM and Sirius entering long-term, sole-source contracts that provide incentives to all of the major auto manufacturers to install their radios in new vehicles. The car manufacturer channel accounts for a large and growing share of all satellite radio sales; yet, as a result of these contracts, there is not likely to be significant further competition between the parties for satellite radio equipment and service sold through this channel for many years. In the retail channel, where the parties likely would continue to compete to attract new subscribers absent the merger, the Division found that the evidence did not support defining a market limited to the two satellite radio firms that would exclude various alternative sources for audio entertainment, and similarly did not establish that the combined firm could profitably sustain an increased price to satellite radio consumers. Substantial cost savings likely to flow from the transaction also undermined any inference of competitive harm. Finally, the likely evolution of technology in the future, including the expected introduction in the next several years of mobile broadband Internet devices, made it even more unlikely that the transaction would harm consumers in the longer term. Accordingly, the Division has closed its investigation of the proposed merger.

Interesting comments by Mr. K. at the Citigroup Global Entertainment, Media and Telecommunications conference in Phoenix on Tuesday.  Here are some highlight from Silicon Alley’s coverage.

“I can tell you there is no decision at the Department of Justice. Timing: I have no idea. I’m not going to give it a guess. This is a deal is ripe to be granted and we should be able to close. We will probably close the evening we get FCC approval. We have been waiting so long we are ready to close.”

On post-merger synergies: “I can tell you that it is in the hundreds of millions of dollars; the value of the efficiencies are greater than the market cap of one of the two companies,” Karmazin said.

“What is going to make us a winner is that we have the best radio on radio. I am betting that radio is going to continue to be a business. We are going to be a successful radio company and our content is going to drive it. The Howard Stern deal–and I didn’t do it, I walked into the company after it was done–I will tell you it more than pays for itself.”

He says don’t expect Congress to support royalties for terrestrial radio (as the music labels and the RIAA want) because it would be terribly unpopular in an election year.

In filings with the SEC this morning, both SatRad companies announced they will holding shareholder votes on the merger on Nov. 13th

http://money.cnn.com/news/newsfeeds/articles/djhighlights/200710040938DOWJONESDJONLINE000561.htm

Jim Cramer from the CNBC show Mad Money was interviewed by thestreet TV and here’s a quote from the interview:

“If you look at the economics of this Sirius-XM deal,
My god you go from being unprofitable to profitable like that “

Check out the video here, the Sirius-XM discussion starts at about 2:04 into the video.

Video - Cramer Interview

According to Wikipedia, In 2007, NewsBios.com named him one of the 100 most influential business journalists in the United States.

Do your own research before investing.

The FCC Chairman Kevin Martin expects a vote on the XM-Sirius merger by the end of the year and reiterated that today when speaking with reporters. According to Bloomberg:

” Martin said the FCC is trying to meet its goal of deciding on pending mergers within 180 days. The agency began its XM- Sirius merger proceeding on June 8, which puts the FCC on schedule to rule by Dec. 6.

“That’s our target,” Martin said today while speaking to reporters. The agency has exceeded its 180-day guideline when reviewing large transactions. “

They will still need to wait for the antitrust division of the Department of Justice to make it’s decision, but as we reported Here last week, that decision may be coming within 30 days.

SIRI stock was up 4.75% at 3.31 with XMSR up 3.18% at 13.62.

RBC Capital analyst David Bank has told clients to expect a decision from the Department of Justice within 30 days and that the deal is more likely to receive their approval than not. This isn’t the final decision as the FCC will also need to rule, but given the announcement of tiered pricing plans which the current FCC chairman favors, it is unlikely they will vote contrary to the DOJ’s decision.

The Stock is reacting positively to this breaking news:

It’s no secret that Sirius and XM have been getting a fairly impressive amount of support for the proposed merger with more the 4300 individuals and 30 organizations, and now they can add former FCC chairman Mark Fowler to the list. Fowler was FCC chairman during the Reagan administration and has the distinction of holding that post longer than any other person in history of the FCC. For this reason his opinion would naturally have more influence than the average supporter.

It’s starting to feel that some momentum is building in favor of the merger, and the stock has been rewarded by rising over 8% over the last 3 trading days. Sirius and XM expect the merger question to be settled by the end of the year.

(more…)

Forbes.com has a video news story that claims that Sirius and XM could be having their earnings reports on Monday. They say their source is Lucas Binder of UBS, but I’m not sure where Lucas got that information. Neither company has announced when they will release their 4th quarter and full year financial numbers(even though it is generally around this time), but odds are they wouldn’t release them without notice, especially together.

The only way that either one of them will be releasing numbers on Monday is either because they are filing for bankruptcy, which is very unlikely due to the large amount of financing each can easily acquire, or the M-word, which would be a surprise joint announcement from both with their fourth quarter numbers. Neither of these options are very likely, so let’s file this rumor away for now. Usually when they announce earnings, they give at least a week’s notice of when it is happening.

According to Orbitcast, theflyonthewall.com is saying that XM and Sirius are planning to announce a merger today at the North American International Auto Show. We’ve commented on why it wouldn’t work before, so I won’t rehash it. If it does happen, look to Backstage to report the details, and thoughts on the merger. Stay tuned.

I do wonder why they didn’t announce this Monday at CES, if it is happening.

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Notes from the Citigroup Conference Presentation by Sirius CEO Mel Karmazin:

-Mel does not like the lifetime subscriptions, because the people using it are probably Sirius’ biggest fans.
-Price hike is possible, but not happening at this time
-They hope to hit goal of 10% of revenue as advertising this year
-No more major deals to do, minor deals still out there though
-Portable device is not a mass-market future, in his opinion
-Deal with MP3 hardware company: maybe, thinking about the relationship, but then there is another company wanting a profit on the device, possibly driving up costs
-Sirius pays 2-3% royalties now to the RIAA, RIAA wants 10%+, Sirius thinks it is worth less than 1%. Music is a good foundation, but they have to add the other content in order to drive subs. Hope to have an agreement or court decision by the end of 2007.
-Agreement with the OEMs for a certain maximum number of ‘contact times’ when Sirius can contact the sub on a promo plan to become self-paying, done in order to receive the names and addresses of those that got Sirius in their car.
-They want to do movie times, price of gas around you, etc. in the future. It would require adding a GPS receiver to the car.
-Confirms that Sirius not FCF + on an operating basis yet, just on a total basis.

Thoughts:

-Making a deal with Creative or Sandisk right around now would be a great thing. While it might make the device cost a little more, such a radio would have greater marketshare than just going it alone, and would bring in greater penetration into retail.

-Lifetime may not bring Sirius more money in the long run, but it helps keep churn lower, albeit probably not by much. I’d say it is good to get OEM subscribers, and keep them.

-Movie times and such has been hinted before, and Sirius has done surveys asking as much. It would be an interesting feature, and possibly one of the best ideas in terms of bandwidth use per unit of revenue that they could want.

-Subscription hike probably happening, but only a $1 or two. Above $14.99, and it has a psychological effect. Probably larger hike for family plan members, to $9.99, but those are just my thoughts.

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