Stifel Nicolaus has issued a broker research note calling the expectations for a successful and approved merger between Sirius Satellite Radio (SIRI) and XM Satellite Radio (XMSR) as now being less than 50%. This also notes that Wall Street now sees only a 10-20% chance of success.
Interestingly enough, the research note says that both companies are attractive on a stand-alone basis and that these companies can become highly profitable in the nex 5 years. Stifel Nicolaus is also maintaining a Buy rating on both stocks.
This sort of echoes what was noted by TheStreet.Com yesterday.
Either way, this is far from over. It seems now that this merger is coming too late. The companies might not be in financial dispair and facing an impending doom, but Congress and the FCC’s delay and now-likely blockage becuase of a fake monopoly is going to have the opposite impact of what they are trying to accomplish. Both satellite radio companies are going to have to jack up prices next year, or at least for newer subscribers. If the merger is allowed Congress and the FCC can get a price lock for 3-years. Big mergers are rarely good for consumers, but this blockage in the end will actually hurt Joe Q. Public.
Jon C. Ogg
June 1, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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