Sirius/XM Nearing Final Hurdles (SIRI, XMSR)

Sirius Satellite Radio Inc. (NASDAQ: SIRI) and XM Satellite Radio Inc. (NASDAQ: XMSR) are both trading higher pre-market on reports that the last FCC commissioner will back the merger if the companies agree to additional conditions.  FCC Chairman Kevin Martin has already supported the merger despite all of the congressional special interests and the RIAA objections to this competing against terrestrial radio.

Apparently the newest requests are for a 6-year pricing cap and a request for one-quarter of the programming to be made available for minority or public interests.  Interestingly enough, we noted over at VOLUME SPIKE (VSInvestor.com) that there was very unusual options activity around this situation.

After this merger has been in the pending file for 18 months, we’d imagine that both satellite companies will capitulate to these demands even if they sue to break them because of "pricing pressure" in an inflationary environment or over lack of feasibility on the additional programming side.

Sirius shares are up over 3% at $2.17 on over 350,000 shares and XM shares are up almost 5% at $8.85 on 44,000 shares in pre-market trading.

Jon C. Ogg
July 18, 2008