Monday, March 24, 2008; 10:06 PM
The merger of satellite radio operators Sirius (NSDQ: SIRI) and XM (NSDQ: XMSR) has been cleared by the DOJ. This is a significant hurdle, though FCC approval is still required for the deal to close. That could come soon, if increasingly loud chatter is to be believed. And FCC Chairman Kevin Martin has indicated in the past that the FCC would likely announce its decisions after the DOJ.
From the DOJ's Statement: "After a careful and thorough review of the proposed transaction, the Division concluded that the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers."
The DOJ supported a critical economic point, that the satellite radio operators compete in a market that's bigger than just satellite radio: "The Division found that evidence developed in the investigation did not support defining a market limited to the two satellite radio firms, and similarly did not establish that the combined firm could profitably sustain an increased price to satellite radio consumers."
The two companies, which have been stuck in regulatory purgatory for over a year?the merger was first announced February 19, 2007?are trading up on the news. XM has spiked 13 percent to about $13.50, while Sirius is up about 4.8 percent to $3.04.
WSJ: "While it is unlikely that the FCC will go against the Justice Department's ruling, it has the power to impose conditions that might make the controversial merger slightly more palatable to the groups lined up against it."
Update: Un-astonishingly, the National Association of Broadcasters says it is "astonished" by the DOJ decision, claiming that XM and Sirius have flouted regulations during their entire existence. Statement.
XM And Sirius Extend Merger Agreement Until May 1 Earnings: XM Satellite Continues to Narrow Net Losses; Revs Gain 20 Percent Earnings: Sirius Q4 Revs Up 29 Percent; Net Loss Narrows; Still Waiting On Merger Approval Updated: Sirius Shareholders Approve Merger With XM; XM Vote to Come