Cramer Positive on Sirus/XM Merger: Indicator of Actual Outcome?

Once again, on his Mad Money show, Jim Cramer mentioned the Sirius (SIRI)/XM (XMSR) merger and touted the downfall of the terrestrial radio broadcasters such as Entercom Communications (ETM) and Cox Radio (CXR). This is the third time in three weeks that Cramer has had a segment concerning this merger and in my opinion it bodes well for the pro merger side.

Cramer loves publicity. By mentioning the merger he gets a lot of extra attention because this particular merger has a certain following and mass appeal. The Sirius/XM message boards and blogs will once again buzz with Cramer talk and mentions of his Mad Money show.

In addition, his string of mentions over the last weeks might support the view that the merger decision is nearing.

Here is the logic: Many people expect that the merger decision will be reached by the end of March, so, in a few weeks. With Cramer leading a pseudo campaign for the merger in the weeks leading up to the decision, he will immediately gain a huge amount of publicity and rerun airplay once a decision is reached. If it should be a positive decision, he will be the most memorable figure associated with the positive outcome. For example, some people will say that Cramer helped get the merger passed. While it is doubtful that he will have a strong impact, most people will assume he did since he started touting the merger right before it was approved. Cause and effect? Whatever...

So this is the basic line of future events. And if we work backwards through the line, we can logically conclude that if Cramer is touting the merger with such vigor, then we can expect a decision soon.

And, I think a lot of us can agree that Cramer is likely well connected, at least more connected to the Street and the wheels of process than most of us. So if Cramer thinks news is coming, and if he thinks it will be positive, then I at least put the odds in his favor.

Disclosure: Author holds positions in the above-mentioned securities.

Comments

[Neal Barkett:]

The only hold up to this merger is the Georgetown Partners. They are using the race card to get a bargain. Sat. radio is very diverse already, but they see an opportunity to use politics to scare the FCC into making a deal to let them in on the cheap. Jessie Jackson is a very self serving man of the cloth. If you can buy your way to heaven he's got a cloud with his name on it!

2008 Mar 11 09:47 AM

[Young Investor:]

What is the hold up! I speak for all who have had our money dragged through the mud because of this. Without a merger we all go down.

2008 Mar 11 04:39 PM

[JasonCliffo...:]

There will always be competition in any business. There has got to be someone or ones holding up the deal so they dont have the added competition from Sirius/XM. Its so sad that they are afraid to let the merge go through. Fear nothing but Sirius/XM because their like WATER. You can slow them down, but you cant stop them!!!

2008 Mar 11 10:57 PM

[bryanz:]

The thing I don't understand is how people are talking about the merger creating a monopoly. Satellite radio is not an industry that needs to be heavily regulated. It's a subsector of a sector of an industry. It's the equivalent of HBO or Showtime in that it's a premium service that you can choose to pay for if you so desire. No one at the Ford dealership is holding a gun to your head and forcing you to shell out $13/month for satellite radio. The merger should go forward, it should have gone forward a long time ago. What are the reasons for the delay? Nothing good that I've heard yet...

Long SIRI

2008 Mar 12 03:08 AM

[yoyoYO:]

think this is more DoJ related than FCC...the fact that an approval here sets a significant precedent for all future transactions is key. while i agree that the DoJ is pretty much of the mind that this merger makes sense, they're having to craft pretty specific language to keep from defining too-broad a precedent and eliminating the muscle the antitrust division wields.

2008 Mar 12 10:07 AM

[S.O.:]

When I hear the word monopoly, Clearchannell comes to mind, not Sirius/XM. This should have been the most quickly approved merger in history, not the longest. It's very simple, DOJ & FCC; nobody needs to have satellite radio, nobody is forcing anyone to purchase the service, and never in history have there been more entertainment alternatives. The I-Pod, along with the internet has killed the recording industry. The government shows complete indifference to that situation, the affect being millions of dollars lost, people losing their jobs, and causing the premature end to an era; the ability to collect music in a collectable format that you can actually touch. Satellite radio competes with so many other music distribution systems that it will never have the negative impact that the I-Pod has. It isn't going to put anybody out of business and whoever thinks it would be a monopoly is a complete fool. This delay by the DOJ and FCC in coming to a decision is embarassing and disgraceful!

2008 Mar 13 08:35 AM

[pfreak:]

How is Clear Channel a monopoly? There are several other huge media conglomerates that they compete with. XM/Sirius merging is absolutely a monopoly in every sense of the word. And arguing that no one needs SDARS is completely irrelevant as to whether a merger would create a monopoly that would be harmful to the consumers of the product. These two companies have spent themselves into a corner and now want the government to bail them out at the expense of their customers. Boo hoo.

2008 Mar 19 12:45 PM

[h cutshaw:]

I have three XM radios and XM promise me that they were going to merge at the end of last year or the first of this year. I have one radio that I have not yet had activated for over eight months.

2008 Mar 31 01:42 PM