FCC Decision on Sirius/XM Merger May Be as Late as May - Stifel

Blair Levin, an analyst for Stifel, issued a report Friday covering many companies involved in the media sector. Included in this analysis was some detail and opinion on the pending Sirius (SIRI) and XM (XMSR) merger. Stifel sees a possible FCC decision taking place as late as mid May.

The companies currently have a merger agreement that expires on May 1, 2008. At that point either company could walk away from the deal without penalty. However, with DOJ approval already secured, it would be unlikely in my opinion for either Sirius or XM to not extend the deal. Investors should watch for an announcement regarding an extension of the merger agreement to happen very late in the month.

If the FCC decides prior to the deal expiration, there will be no need for the Board of Directors from each company to meet. Additionally, investors should keep their eyes out for Sirius and XM to announce their quarterly conference call dates. Sirius will definitely have a call. If the merger is approved, it is likely that XM will not have a call, as there would be no requirement to do so.

REPORT EXCERPTS:

• VERIZON WIRELESS (VZ), AT&T (T) LOOK TO HOLD HIGH GROUND ON D BLOCK. We believe that the ultimate winners of the planned FCC re auction of the 700 MHz D block will likely be Verizon Wireless and/or AT&T. At a House hearing last week, FCC commissioners voiced support for taking another stab at fomenting a public-private partnership to develop an interoperable network for first responders. They acknowledged that to attract bidders, some rule changes will be necessary, the most difficult of which appears to be a perceived need to better define and control the demands of a public-safety trust. With competitors either struggling or less motivated to build a new network, AT&T and particularly Verizon appear to be in the best position to negotiate terms and bid on the spectrum.

• GOOGLE (GOOG)-YAHOO (YHOO) TEST EXPANDS, BUT MAJOR LONG-TERM DEAL QUESTIONABLE. Reports that Google and Yahoo are expanding their collaborative search-ad tests could strengthen the tactical hands of both vis-à-vis Microsoft (MSFT). Longer term, we are skeptical a major Yahoo outsourcing deal with Google would pass antitrust muster.

• NO FCC XM-SIRIUS DRAFT YET. FCC meetings continue, but no draft with proposed conditions has yet emerged.

• AT&T BID FOR COST RELIEF GOES DOWN TO WIRE. The FCC is due to act on an AT&T petition for cost-assignment forbearance, a decision that could go either way or produce a compromise and partial AT&T relief.

• FCC EYES ACTION ON NETWORK MANAGEMENT. An FCC majority continues to eye new safeguards for broadband applications and consumers, creating overhang for Comcast (CMCSA) and concerns for other cable operators and telcos.

• WIRELESS CRITICS PRESS CASE ON TEXT MESSAGING. Public-interest groups and others urged the FCC to protect wireless text messaging and short codes from wireless carrier “discrimination.” Industry begs to differ.

Tyler Savery Position - Long sirius, Long XM

Comments

[Astronut]

That means sell SIRI and BUY XMSR...With the 4.6 ratio, in my opinion.

[4play2]

No sir User. Yes, buy XMSR but hold on to whatever SIRI you have. If there is a mass sale of SIRI the 4.6 multiple will be a lot less and possibly no premium at all. Lets be careful out there.

[User 163772]

"Stifel sees a possible FCC decision taking place as late as mid May". How do they see that? Do they have any special glasses? In reality, they cannot see anything that we can't see so why should their opinion regarding other statements be given any credibility?

[BABABOOOOOOIE]

May 14 9:30 am is next scheduled meeting. "As late as mid May" is a safe statement. Since the FCC is accustomed to sitting on their hands, until their required meetings!

[User 168418]

FCC IS JUST PLAYING THE GAME..............WE KNOW FCC WILL APPROVE THE MERGER ITS HARD NOT TO SINCE DOJ HAS APPROVED THE MERGER. THE QUESTION IS JUST WHEN? THIS I THINK IS STILL A GOOD TIME TO BUY SIRI OR AT LEAST HOLD ON TO WHAT YOU GOT.

[163888]

At this point this has gotten ridiculous. It isn't like the FCC didnt have a year before the DOJ approved, to do all that they are doing now. If it is the democrats that are holding this up, F them. Its not like decisions in the FCC have not gone along party lines before. I have to say this is one issue in a long time were democrat and republican subcribers and investors are in for the most part total agreement.

[cos1000]

163888, I am in total agreement with your comment. That Stifel allows an analyst to make this seemingly predictive comment at this time is ridiculous. Anyone can see the date of the next FCC open meeting by going to the FCC's website.

I don't understand why all these "Johnny-Come-Late... analysts need to voice their suppositions at this point in the FCC process. Do they think they are being helpful, or are they just trying to get involved before the big announcement. This would allow them to lay claim to their "Sixth Sense" abilities. Quite frankley, I am sick of their naive attempts to fool the uninformed. Fully invested beleivers in these companies already realize their tremendous growth potential.

These comments do little but shake out the last of the weary. "Jump out now before it's to late."... they might Say. "Save the "Shorts" by being a stupid long"... might be another thought, as has already been said by many.

Fear not my friends. The waiting game is coming to an end. The FCC will decide, in spite of itself, and be left with passing on the DOJ decision, with minor restrictions in their license.

Hang in there and Hang LONG!!!

[monk26]

Hey, FCC! GET YOUR HEADS OUT OF YOUR ASSES ALREADY!!! By now we know that your agency is a colossal drain where our tax money is going at a fast rate. If you are telling me that, after all the time gone by, you cannot come out with a decision on this merger, I draw one of two conclusions: either you are a group of incompetent morons, or you are simply trying to sabotage the deal by dragging your feet until you bleed the two companies out of money and into bankruptcy court. Either way, doesn't look like you give a s**t about consumers. Look, FCC, just tell us what it is you lack the most - the balls to make a decision one way or the other, or the brains to understand why this merger makes sense? And, while we are waiting on your wisdom to be spoken, just keep letting AT&T buy up every company they lay an eye on, doesn't take you hardly any time to approve those.

[Yuriko777]

Sirius is the only weak link in my portfolio.

[NotVerySmart]

Yea... Yea... FCC bad. Haven't the Dems got enough from thier shorts yet? Funny how SIRI started climbing Friday and immediately another "protest letter" came from a dem senator brining it right back down. Wonder how much he was paid for that? I smell a slimy little rat (or a bunch of them). Well I'll just keep buying at a discount... Thanks shorts!

[cos1000]

Yuriko, I thought you said you got out of this stock a week ago, why are you still posting. Old habits hard to break. Give me a break with your weak postings!

[Roxieanne]

NotVerySmart

I think you are smart. This is the game that has been being played for nujmerous months.

Consumers who subscribe to Siri and XM and investors have been hurt by the protests by congressman and the groups who are demanding a piece of the pie.

[NotVerySmart]

Thanks Roxie. Here's something special just for u. I see some sort term resistance @ 2.40, if we can hold this for another week, the earnings alone (should be later this month) will cause shorts to cover. Watch the 2.80 resistance level (upside) next stop is about 3.05. Check out the options chain to see conversion to calls from puts running 10-1 on the call side @ 3.00 and 5-1 in favor of calls at 4.00. In english this means tha the options favor the upside between $3 -$4. If wae break $3.08 you better hang on 'cause we're going to 3.80. Yes...yes... I know it's a falling knife but I think the shorts have had thier day and are looking to convert and ride the long side. Take advantage of the weak ones and buy up thier shares as they dump them. My (personal) low target is 2.19 and I'm willing to ride it out for the profits (looking for $3.80 long). With over 10% of the float out in shorts last month, I think this has a short term oversold condition. Options agree with me. Best of luck to you! Disclosure - Long 58K shares and in aquisition mode. Take care!

[NotVerySmart]

BTW. I'd like to reiterate that I am not very smart. I was buying GOOG last week (cost average of $460) when just about everyone (including talking heads) were selling. Only made + $85 / share instead of a +$90 possible. Man I am sooo stupid. Missed that last $5. Oh well. :-)

[User 181586]

would they make up their minds already, i'm sick of the yo-yo stock

[User 172623]

NotVerySmart--I agree with you. Would not mind seeing panic selling down to 2.30 where I would buy buy buy buy buy.


On Apr 22 04:15 AM NotVerySmart wrote:

> Thanks Roxie. Here's something special just for u. I see some sort
> term resistance @ 2.40, if we can hold this for another week, the
> earnings alone (should be later this month) will cause shorts to
> cover. Watch the 2.80 resistance level (upside) next stop is about
> 3.05. Check out the options chain to see conversion to calls from
> puts running 10-1 on the call side @ 3.00 and 5-1 in favor of calls
> at 4.00. In english this means tha the options favor the upside between
> $3 -$4. If wae break $3.08 you better hang on 'cause we're going
> to 3.80. Yes...yes... I know it's a falling knife but I think the
> shorts have had thier day and are looking to convert and ride the
> long side. Take advantage of the weak ones and buy up thier shares
> as they dump them. My (personal) low target is 2.19 and I'm willing
> to ride it out for the profits (looking for $3.80 long). With over
> 10% of the float out in shorts last month, I think this has a short
> term oversold condition. Options agree with me. Best of luck to you!
> Disclosure - Long 58K shares and in aquisition mode. Take care!

[NotVerySmart]

Yea.... Nice day today. Added more @ 2.42 (thanks shorts) and watched it go to 2.57 (yeeeehaw). Chart has some nice momentum. I really like the signals. I may even up my sell target. I also happened to catch the move in goog today.... just lovin' it! Now holding over 65k SIRI. Anyone want to give me more on the cheap? Stay long...stay strong. :-)

[NotVerySmart]

BTW. We don't need FCC approval anymore for a catalyst. SIRI can beat earnings (they did it last time), this will shake of those nasty short positions. Watch for an earnings announcement soon. I will continue to add as SIRI is just a hair above it previous 52 week low. Damn the torpedos...full speed ahead! Good luck fellow longs. Let's crush the shorts and make them pay up.

[163888]

2.4 was a joke, who here thought it wasn't over sold. I never thought I would be able to buy back shares at this again. The last time it was there, SIRI was a vary distant second to XMSR with just over 600,000 subs to there name, and only getting about 100,000 subs a quarter. Now are they still lossing money with 8.3 million, yes. That is because they are going after growth, in a way they never have before that time. It cost them what about a 100.00 for each chipset in each car, half of which they do not get. That still leaves the other half they would not have gotten if they did not ramp up penitration. It does take some time for revenues from existing subs to overtake the cost of that kind of growth. What I think many are missing is, when they say that they where expecting the two to be profitable with as many subs as they have, have forgotten they did not expect them to have this many subs so fast as they did at that time about 2.5 years ago. What I am saying is the time frames to be profitable have not changed, just the amount of subs to get there. I believe when that point has been crossed they will be generating profits at a faster rate and be much better off, then if they would have stuck to their old model of slow and easy. Reason being once that point is crossed, they will reach a point much faster were they do not need to be to concerned with growth, and all the cost that gos with it will also not be there.

[Steven/123]

Has anyone thought what would happen if let's say SIRI walks away
on May 1. They could say look we have tried everything possible to work with the FCC but with no approval date set its time to move on. With everyone shorting
SIRI and long XM thinking the deal was to be approved would have to cover their positions. I think its about 150 million short's on SIRI.

[NotVerySmart]

Yup. You are correct Steven the short-boy it's just over 150M, but I would propose a failed merger would at least provide some relief as it removes all doubt. I guess the 10% move up is all those other shorts thinking the merger won't go through. :-)

[NotVerySmart]

P.S. Just teasin'. The shorts are covering 'cause they really like the pope's broadcast. Now that makes sense, right? About as much sense as a failed merger. BTW wanna buy some SIRI to cover? You can have my 68k for $3.80.... deal?

[NotVerySmart]

SIRI up over 14 cents in morning trading. Maybe I should change my handle. Hold on kids it's gonna be a wild ride!

[Steven/123]

NotVerySmart' This has been the strangest and longest buyouts I have every seen. Strange days ahead? Who knows?
As for a failed merger making no sense, you are assuming that the FCC
has some sense? The bottom of my shoe has more sense then the timeless and useless FCC!

[oregonduck]

I predicted this a couple weeks ago. I bought about 10,00 shares when it was around between 2.40 and 2.50. I never thought it would get that low. Now I have 32,000 shares with an average cost basis of 2.72! I cant see how I lose money on this deal! All the shorters did was give us an opportunity for cheap stock. Now as of today we are even and if we go down again pre merger I can buy more! Or, if it goes up to 3.20-3.50 pre merger, it gives it a better chance of a pop up to 5.00 or higher. A lot of us with lowere basis will sell a lot of our stock but not all of it, because we will not want to pay all short term taxable gain on 150% gain. I see a long term gain of maybe 10$ per share or higher in 2 to 3 years and will want to keep a lot of my shares, buying more in the low times and selling some in the peaks, but keeping most of my "pot" of shares. Those of us who believe in the stock and now have a low basis, thanks to a lot of the insiders who I think have been shorting the stock pre-merger (and also buying a lot of stock on the side at the same time), will make a lot of money.


On Apr 24 08:32 AM NotVerySmart wrote:

> SIRI up over 14 cents in morning trading. Maybe I should change my
> handle. Hold on kids it's gonna be a wild ride!

[fredlee]

Just so you all know. The FCC can't block this merger, period. They have no legal authority of precidence to do so. They have a right to review the merger, loosley under the Clayton Act, but they would have to sue to block it, just like the DOJ. They can do these things only:
1. Deny them any bandwidth, period, killing the companies.
2. Cut spectrum already allotted, or not allow them to use the combined total on one company(the more obvious response)
3. Make conditions of the agreement to give the license transfer. These will have no legal backing, and can be completely ignored by Sirius. They would be basically promises.

Here let me end all your wondering about whats going on. The FCC is the last thing to delay this merger. They know they cannot deny the merger, or they already would have, having the votes necessary. Only one problem, they wont and cannot deny this merger, legally. They can only make a case for spectrum allocation to the governement anti trust committee, etc.. congress. They have never and can never BLOCK a merger. DO YOU PEOPLE REALIZE LEGALLY THEY CAN MERGE RIGHT NOW!!!! No one can stop them. They just need the licensed changes, and they are done. Im sure the FCC is delaying this for CC. I hope you all feel better now. Research the powers and history of the FCC, and all Sirius stockholders will smile.

[cash money]

Sirius should ask the FCC how much they are getting paid by commercial radio and offer more

[163888]

fredlee, I agree, and that is the reason Mel K. has said that; The agreement that both companies would not be allowed to merge is not legally binding.

[killerkaul]

fredlee....... Excellent article.