FCC Commissioner Copps Votes "No" to Radio Merger: No Surprise 67 comments
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FCC Commissioner Copps has opted not to bring a counter proposal to the table, and simply go with a “NO” vote on the proposed Sirius (SIRI) and XM (XMSR) merger.
According to the Wall Street Journal, Copps rendered his decision on Monday, July 22nd. The “NO” vote by Copps represents the first commissioner to go against the proposed merger. The merger now has had three of the five commissioners cast their votes:
- MARTIN - YES
- MCDOWELL - YES
- COPPS - NO
- ADELSTEIN - UNDECIDED
- TATE - UNDECIDED
It is widely anticipated that commissioner Tate will vote in favor of the deal, but wants some “teeth” in the deal to ensure regulatory compliance. Adelstein has offered a counter proposal to the Draft Order Issued by Martin, and has stated he is open to negotiation.
Most who follow the sector believe that Sirius and XM are negotiating with Tate, who in theory would want fewer concessions than Adelstein, in hopes of obtaining the third vote needed.
Market Response
Those that follow the satellite radio equities closely noticed some wild trading Tuesday. Both Sirius and XM dropped like rocks in less than a minute on what appeared to be no news. Then we all saw what happened - FCC commissioner Copps voted against the merger. But why did that cause a drop? Most were expecting Copps to vote against the merger anyway.
The answer could be a simple as the headline attached to the Copps story:
“FCC Member Votes Against XM-Sirius Deal”
Given all of the recent talk about commissioners Tate and Adelstein, it was only natural that people were expecting their votes first. More specifically, people anticipated that the next vote to be publicized would belong to Tate, and that the companies were waiting on “real” negotiations with Adelstein in hopes that Tate would come through with the last YES vote needed. The headline offered no indication of which commissioner voted, and perhaps some assumed that Tate came out against the deal. Had this been the case, it would have been devastating for the equities, leaving all hopes of a merger in the hands of Copps and Adelstein.
The street quickly sorted out that it was Copps that fired his gun while Tate is still exercising her right to remain silent. The equities rebounded, and now once again, we all “Wait on Tate”.
Cowen Analysis
Analyst Tom Watts was quick to the keyboard after it was announced that commissioner Copps had voted no. The analyst noted that the Copps vote was “no surprise”, and that he was still looking to FCC commissioner Tate for the final approving vote on the merger deal.
Watts notes several points which have been oft discussed by this publication, including the fact that it is enforcement issues, and perhaps not more stringent concessions that commissioner Tate is seeking. “The focus remains on Republican Commissioner Deborah Taylor Tate. Her key concern is reported to be the companies' prior violations of FCC rules in their deployment of repeater towers. An announcement of an enforcement action by the FCC came out last Friday, however, the matter has been under consideration by the FCC for some time. We expect the companies to reach an arrangement that could include a fine and/or a timetable for bringing all repeaters into compliance. Such an arrangement should address Commissioner Tate’s concerns, enabling her to vote in favor of the deal.”
Watts calls Adelstein a “fallback option” for Sirius and XM, stating that Adelstein has expressed a willingness to negotiate his proposal. Personally I see Adelstein's proposal as a deal breaker, and he would need to move substantially to come to a deal that the satellite radio companies would feel comfortable with. To his credit, Watts see it more likely that the merger will gain approval with Tate rather than with Adelstein, a position I agree with.
Things seem to be moving fast and furious, so keep your eyes peeled for SDARS merger news.
Catch all of the news of the week on SiriusBuzz Radio. This week's show is Thursday at 9:00 PM EST.
Position - Long Sirius, XM
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RReagan, as I have said, look at it this way if there is one other good thing that has come from this delay. Is that the 2 FCC democrats just pissed off about 20 to 25 million investors/subscribers, At least half of those were democrats/independents... That along with the oil issue may turn this into a republican year. I am almost happier about that.
According to the Wall Street Journal, FCC commissioner Tate is set to approve the proposed merger of Sirius and XM with a fine of $20 Million fine that is said to resolve several enforcement issues surrounding satellite radio.
Should this news be accurate, the satellite radio companies now have the green light to move forward with their merger.
Once consummated, each share of XM will receive 4.6 shares of Sirius.
Dont worry, but as I said can you see why it may take a while for it to move up, if you are skepical just think about the rest of the people, and you have been here and seen the common sense that I and others including yourself have said.
notsosmart, I know you are a DSX fan (I have seen you on a Seeking Alpha, article, comments section) you got to love that one. This quarters dividend is projected to be .90 to .92 cents a share.
P.S. are you any relation to "notverysmart". Or is that you, and you changed your name?
And to naysayers like The Vicar of Value.....pffft.