Wednesday, January 10, 2007

S&P: Sirius-XM Merger Doesn't Make Sense

S&P: XM-Sirius Deal Wouldn't Fly
2:37p ET January 10, 2007 (S&P) From Standard&Poor's Equity Research.

XM Satellite Radio (XMSR) Maintains 2 STARS (sell) Analyst: Tuna Amobi, CPA, CFAAfter a comment at an investor conference, we think XM is up today on the inference that 2007 merger talks with Sirius (SIRI; 3 STARS, hold) are possible. Despite potential strong synergies, we do not think, given the FCC's recent comments, that the potential combination of satellite radio rivals would pass regulatory muster. Assuming satellite radio will keep its duopoly-like structure near term, we see any takeover premium as unwarranted. It is also not clear to us by how much a 2007 ramp of auto OEM units could help offset further fundamental contractions in the retail channel.