XM's Pre-Announced Q2 Results May Hold Merger Clues

Before everyone jumps to a conclusion that the merger decision is now complete, I want to caution readers that this piece carries some assumptions, and some reading between the lines. Like a puzzle, you oft do not need all of the pieces to have a general idea of what the picture has in store.

In a filing with the SEC Monday, XM (XMSR) pre-announced many of their metrics for the second quarter of 2008. As with all quarterly announcements, people tend to focus on items such as subscribers, churn, conversion rates, etc. However, sometimes there is additional language that has some new nuggets that could have important meaning.

I believe that this may be the case with the latest filing with XM Satellite Radio. Look at the filing, skip over the subscriber numbers, the churn, the conversion rate, and the size of the loss. While all of these are important, it is a small item after the loss that grabs the attention.

“(excluding the impact of any FCC settlement)”

The reason I find this interesting is that it is commonly assumed that Sirius (SIRI) and XM have some enforcement issues at hand before the FCC. It is widely known that some of these enforcement issues have been the topic of discussion in Ex Parte filings. It is also known that Sirius and XM have been meeting with the enforcement bureau lately. Add to this the fact that it is rumored that commissioner Tate wants some teeth behind this merger, and we may have a glimmer of some activity on the enforcement front.

Most people generally agree that it is commissioner Tate that is the focus of this merger now. Knowing that Tate wants some teeth in this merger, and knowing that there have been several meetings with not only commissioners, but Tate as well, could lead one to believe that perhaps some penalties for past infractions (or alleged infractions) are being negotiated in conjunction with the merger.

It is no secret that there are quite a few “gray areas” with regard to the licenses of Sirius and XM. These gray ares have been subject to interpretation, and in many ways have caused this merger more than a few sticking points. Because of this, it would be of little surprise to me if a commissioner would want concrete points that are fully detailed and understood by all parties. Getting to this point would eliminate “gray areas” and allow the process to continue.

Position: Long SIRI, XM.

Comments

[voogie61]

Ya know, all this talk about concessions has been a complete criminal facade from the beginning. The FCC, NAB and Georgetown Partners have been pulling these "talking points" out of their collective backsides just to delay the merger in hopes that the two companies would either "die on the vine" or the competition could develop a marketing strategy to regain control. It reminds me of a scene from the movie, Diehard, where Hans Gruber makes his frivilous demands in exchange for release of the hostages. It was all just a decoy to a much more sinister plan. Here's how it went - " I have comrades in arms around the world languishing in prison.
The American State Department enjoys rattling its sabre for its own ends.
Now it can rattle it for me.
The following people are to be released from their captors.
In Northern Ireland, seven members of the New Provo Front.
In Canada, the five imprisoned leaders of Liberté de Quebec.
In Sri Lanka, the nine members of the Asian Dawn."

Get my point?

[Kentucky / John]

And it's taken over 500 + days to get to this point? What is wrong with the FCC? Is it just incompetence or is it also that some in the agency have been bought and sold? The federal government looks really bad on this one.

[bababoooie]

Nor should we ignore the potential for “government failure,” such as when we adopt regulations that we intend and expect will benefit consumers but, in the long run, do not in fact do so.

Remarks of Commissioner Deborah Taylor Tate
West Africa ICT Roadmap to Opportunities Conference
La Palm Royal Beach Hotel
Accra, Ghana
July 8-10, 2008


Maybe she should listed to what she is saying!!!!

[bababoooie]

Oh..... That was only with respect to the other sector. again I will quote the "Commish"

Accordingly, I have been a strong proponent of a light regulatory touch for broadband service provided across platforms – including cable systems, telephone lines, power lines, and wireless systems.

D O U B L E S T A N D A R D!

[mudslinger]

So Copps has voted no...does anyone remember if this third vote starts the 10 day clock (it would actually start next Monday)...or does it have to be 3 votes on the same side (i.e. 3 yes's or 3 no's) to start the clock?

[JR-Boston]

3 yeas or nays starts the clock.

[oregonduck]

Copps should be removed for Fraud, incompetence, and collusion with the NAB.

There--that feels better.

Also, hes a cop. Probably a traffic cop. I cant stand traffic cops.