Thursday, March 15, 2007

Merger Talk: Forbes On Yesterday's FCC Meeting

Congress Clouds The Sirius-XM Picture
Forbes, R.M. Schneiderman, 03.15.07, 10:15 AM ET

Congressional criticism of the Federal Communications Commission on Wednesday offered less-than-stellar news for Sirius Satellite Radio's potential merger with rival XM Satellite Radio.
During the meeting, members of the House Energy and Commerce Committee lambasted the FCC for not enforcing concessions on past mergers, at a hearing about telecommunications and the Internet. That is a "subtle negative," said Thomas Eagan, an analyst for Oppenheimer. "The criticism the FCC received may cause them to both analyze the proposed merger with more rigor and more carefully weigh (and prepare to enforce) any concessions they may require for approval."

The committee's harshest criticism, Eagan said, pertained to the FCC's failure to enforce concessions mandated for the approval of the July 2006 merger of AT&T and BellSouth.
The meeting marked the first time in three years that the the committee met with the FCC and allowed an opportunity for Congress to ascess the commission's performance on telecommunications policy. While Congress does not ultimately have the authority to decide if XM and Sirius can merge, analysts said the pressure its members exert often carries weight on the FCC's decision.

Despite the potentially troubling news, Eagan said he continues to "believe that the proposed merger is likely to be approved." He maintained "buy" ratings on XM Satellite Radio and Sirius Satellite Radio. In Feb., XM and Sirius agreed to merge. (See "Sirius, XM Want To Make Music Together") Yet it remains to be seen if federal regulators would consider such a combination a monopoly of the nascent industry. (See "FCC Chief Cautions On Satellite Merger") ...read more: here

3/15/2007 11:11:00 AM

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