Sirius/XM's 'Chinese Inspection': Leaving the Merger to Rot?

| About: Sirius XM (SIRI)

By Gino Lattarulo

The Sirius (NASDAQ:SIRI) - XM Satellite Radio (XMSR) situation reminds me of a particular scene in the film Days of Thunder in which Fred Thompson (yes the Senator) asks his two NASCAR drivers if they have ever heard of a Chinese inspection. This refers to a practice that occurs when a company attempts to import an unwanted and perishable product and the inspector will "leave the lettuce" out on the dock and inspect it when they get darned good and ready to. Of course, by the time they get around to it, the lettuce has spoiled and is worthless.

This is what has been running through my head for the last 12 months concerning the Siruis / XM merger. We witness posturing and hear phrases like "protecting the consumer" or "in the best interest of the public". Has sitting on this issue for 17 months been in the best interest of the consumer and stockholders?


Here are three points to consider.

  1. Listeners want the merger because they get the best of both worlds all in one neat package.
  2. Auto buyers want the merger because they won't have to base a part of their purchasing decision on which Satellite Radio company is attached to it. Lets face it, purchasing a car is hard enough.
  3. Stock holders obviously want the merger. Enough said there.

The only people that do not want this merger are The National Association of Broadcasters and the politicians who are supported by them.


The Justice Department and The FCC are both guilty of letting the lettuce spoil. The only difference is that The Justice Department won't come out looking like the villain if the merger is declined.

Disclosure: Author holds long positions in SIRI and XMSR