Since the definitive proxy statement for the XM Satellite (XMSR) / Sirius Satellite Radio (NASDAQ:SIRI) merger was filed roughly two weeks ago, there have been very few substantial developments in this transaction with respect to the federal regulatory processes.
The unfounded enthusiasm over a potential DOJ decision this month seems to have subsided as the realization seems to have set in that this will not be a rapid HSR second request review. It remains somewhat of a mystery as to how or why so many legitimate analysts believed, and continue to believe, that a DOJ decision is imminent. The DOJ has certainly offered no indication that it is nearing a decision. On the contrary there has been absolutely no leaks or suggestion from any legitimate source that the regulator may act soon. In a case of this magnitude, some sort of leak usually occurs. This has obviously not happened to date.
This publication sees no reason to expect a DOJ decision this far in advance of the FCC decision (assuming a the FCC review continues the full length of its informal review "timeclock") and it is very likely that the DOJ decision will be delayed beyond November if the FCC review continues on its current pace.
Regarding the FCC review, requests for stopping the informal review clock have started to filter in from third parties. In addition to the National Association of Broadcasters, U.S. Electronics and Georgetown Partners have filed stoppage petitions within the last two weeks. All three parties basically echo the same argument that the clock should be stopped in order for further disclosure from the companies on various merger and non-merger-related issues.
Interestingly, no petitions to stop the clock have originated from the political arena as of yet. Given that such a large number of federal lawmakers have voiced opposition to the merger so far, it would be somewhat surprising if some sort of formal request for review delay and/or public hearings were not made in the near future by politicians. This would definitely have an impact on the timeclock/hearing situation, whereas the current petitioners may not not be able to convince the regulator into delaying the review process at this stage.
Again, there is no solid indication either way in terms of the FCC's direction at this time. The "timeclock" issue sees be somewhat under that radar as the vast majority of analysts and industry observer seem to be mostly concerned with the overall merger chances, than the mechanics involved in the critical regulatory processes.
Nevertheless, the DOJ and FCC hurdles remain extremely high. Until there is some viable sign that a decision is forthcoming from either regulator, it will be expected by this publication that the review will continue well into this quarter and quite possibly into the first quarter of next year.
Our odds of a successful merger completion remain at 1 in 3.
Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.
