Sirius Is Not Whole Foods Market

There have been a couple of media articles about shares of Sirius Satellite Radio (SIRI) rising because progress of the Whole Foods (WFMI) buyout of Wild Oats (OATS) is a signal that government antitrust watch dogs are going easy on mergers. Late last week a court ruled against the Federal Trade Commission by denying the agency’s request to block the transaction. The FTC has appealed the ruling.

The news move Wild Oats shares up 18% to $18, near their 52-week high. Whole Foods jumped 8% to almost $45.

Rumors are for fools. For starters, over the course of last week, shares in SIRI were down 7%. The stock of its potential merger partner XM Satellite Radio (XMSR) was down 5%. The S&P was down only 1%. The progress of the Whole Foods merger hardly helped the satellite radio combination.

And, the FTC is not the FCC. Nor is it Congress. The objections to the SIRI merger come from the fact that the government licensed the companies the airwaves that allow them to send their signals from the satellite to the customer receivers. It is a monopoly created by the FCC, not by hippies who want to buy organic chow.

The SIRI  merger is still unlikely. Congress has a problem with it because it believes that the price for satellite radio to the consumer will eventually go up due to lost competition. The FCC’s problem is that they hate Howard Stern and will do what they can to hurt him now that they can no longer regulate his content.

All mergers are not created equal.

Douglas A. McIntyre