In a CNBC interview a few moments ago (around 4:45 PM EST), former FCC-Head Michael Powell said he believes that the merger between Sirius (SIRI) and XM (XMSR) will pass.  He did state that there would probably have to be some serious concessions that have to be made, but the interesting part is that he he does think the deal can pass.  For whatever it is worth I echo this, and that is the belief that this deal will pass with some serious concessions.  Most likely this will be in the form of price locks for a fixed period, and with demands that local media content not be stripped to where these licenses compete on local radio markets for a fixed period of time.  Powell did note that FCC’s current chairman (Martin) is tough on deals and tough on decency, and he thinks that it will not just be a rubber-stamping of an approval.  This is far less critical than the AT&T (T-NYSE) merger with BellSouth/SBC, and the FCC became very weak in the knees on that merger and allowed the merger to proceed with far fewer concessions that the companies would have agreed to (that is my opinion anyway).

Perhaps the most interesting point here is that Michael Poweel didn’tcome out swinging against this deal.  That means he isn’t letting hisold personal ex-conflicts get in the way.  If you will recall he ispart of the reason that Howard Stern (or so they say, and outside ofthe huge payday) was wanting to go to Satellite radio instead ofterrestrial radio so that he could avoid massive decency fines.

Keep in mind that with all of the regulators and Congressionaloversight members that can dip their hands into the SIRI/XMSR mergerthat there will be many challenges to this merger.  There should justbe an assumed ‘headline risk’ on major news wires about "SO AND SOWANTS A MERGER REVIEW" and "SO AND SO CHALLENGES THE MERGER" any andevery day.  They can all command too much prime media time for free bychallenging it and scrutinizing it publicly before approving it to passit up.

Michael Powell is now an advisor to Providence Equity Partners inprivate equity, so he isn’t letting old feuds between he and HowardStern influence this process (not that he would since Stern isn’t anofficer).   SIRI shares closed up 5.95% at $3.92 on more than 250million shares.  Shares are roughly flat after-hours, although they hadbeen down marginally before Powell came on CNBC.  Hopefully this is thelast SIRI/XMSR story of the day.

Jon C. Ogg
February 20, 2007

Jon Ogg can be reached at [email protected]; he does not hold securities in the companies he covers.

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