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Will Tate Approve Radio Merger with $20 Million Fine?

by: Tyler Savery July 24, 2008 | about stocks: SIRI    

Tyler Savery

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[update below] With four of the five FCC commissioners having cast their votes, two in favor and two against, the audio entertainment world is now waiting on FCC commissioner Tate to cast her deciding vote. The events of Wednesday actually help us better understand exactly where the merger stands. The fact that democrat commissioners did not wait and delay the process by 10 days bodes well for the process.

Thus we wait on commissioner Tate, and a number of headlines, some of which are Howard Stern type material, come to mind.

  • “Tate Is Late, Sirius (SIRI) and XM (XMSR) Expecting”
  • “Tate Plays Hard To Get”
  • “Tate Will Be Casually Late For The Event”
  • “Can’t Consummate Without Tate”

The list could go on and on, but the bottom line is that commissioner Tate is holding all of the cards. In the minds of many, the outcome is already known, it is just a matter of how much Tate grows the pot in the process. Most think that Tate will not be too greedy, but only time will tell.

The positive in recent events, is that once Tate votes, the process is complete. People are now betting on the mindset of Tate, and her decision could come at any time.

Update:

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 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 the deal is consummated, each share of XM will receive 4.6 shares of Sirius.

Position: Long Sirius, XM.

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This article has 78 comments:

  •  
    Jul 24 04:18 AM
    The Wall Street Journal must have the inside jist because they definetely wouldn't be putting their credibility on the line by making the comment about Tate and imminent approval. I just hope that there are no more stipulations when the merger goes through.
    Reply
  •  
    Jul 24 05:06 AM
    About time !! all it took was a payoff to the FCC jerks!
    Reply
  •  
    Jul 24 07:07 AM
    The day has arrived! Go girl give us the "YES" vote!
    Reply
  •  
    Jul 24 07:41 AM
    I wish she'd just freakin' vote already. $20 mill? Like the companies haven't been punished enough by this painfully long process. Seriously. These commisioners just seem out to make a name for themselves. 15 months ago .. or however long it has been we all could've seen a 3-2 vote along party lines. I can't believe it took this long.

    Reply
  •  
    Jul 24 08:08 AM
    Greedy as s politicans!!!
    Reply
  •  
    Jul 24 08:26 AM
    Being new to the market but long term Howard fan, Can someone tell me what will happen to my 10,000 shares of Sirius. Above story suggests XM will receive 4.6 shares of Serius
    Reply
  •  
    Jul 24 08:29 AM
    If you only have SIRI nothing should change. XMSR stock will be converted to SIRI stock. Each XMSR share will turn into 4.6 shares of SIRI.
    Reply
  •  
    Jul 24 08:37 AM
    Nothing will happen as far as your ownership of Siri. You will still have 10,000 shares but hopefully they will be worth more than the current $2.68 per.

    What that Wall Street article also mentioned that scares me is that the NAB could, and likely will, file an appeal with the DC court of appeals which may be them enough time for the November elections. If Obama wins the election, Martin will be likely replaced by a Democrat which gives them the majority in the FCC and then they will block the merger. Aint that something?
    Reply
  •  
    Jul 24 08:40 AM
    C'mon... don't go sayin that stuff!!
    Reply
  •  
    Jul 24 08:46 AM
    Do shareholders or customers have any legal recourse against the FCC? Seriously. Do they? None of their actions have had the consumer in mind. As a Sirius subscriber, I couldn't wait for the merger to go through and the manner and reasoning with which the FCC dragged its feat is sickening.
    Reply
  •  
    Jul 24 09:21 AM
    stinkaroo, When Tate votes yes the deal will be consummated without delay by the companies. Short of some sort of injunction, which would not be granted given the DOJ approved the deal after reviewing for 15 months, NAB is wasting its time and money. There isn't any way that a judge will undo these merged companies once the deal is done. Relaxxxxx! We're almost done.
    Reply
  •  
    Jul 24 09:27 AM
    WSJ Marketwatch:
    9:17 AM ET FCC chair says agreement reached to OK XM-Sirius deal

    Here we go!
    Reply
  •  
    Jul 24 09:30 AM
    GIVE ME $20 FRICKEN MILLION DOLLARS AND I MIGHT VOTE FOR YOU.

    SICKENING.
    Reply
  •  
    Jul 24 09:32 AM
    Cos1000....... what do you think of long term hold, on siri stock, based on stinkaroo's "appeal" scenario? When you have time, no hurry.
    Reply
  •  
    Jul 24 09:33 AM
    Why didnt the FCC tell SIRI & XM 15 months ago that the pricetag for their merger was 20 Miliion. They would have paid it.
    FCC = The SDARS Mafia
    Reply
  •  
    Jul 24 09:38 AM
    Cos1000......... just saw your reply to stinkaroo above. Thanks.
    Reply
  •  
    Jul 24 09:43 AM
    siri and xm dropping quite a bit the last few minutes.........odd!..... a buying opportunity????
    Reply
  •  
    Jul 24 09:43 AM
    Only down 30 cents in pre-market trading. Woo-hoo. I'm so sick of this stock it's unbelievable. That is why the pop will be limited. I don't think I'm the only one feeling this way. Hopefully there is a pop. I suppose the $20 mill price tag is too much for wall st. to handle. Maybe Wienke talked. The sky is falling. The end of the world. Soon as this sucker hits $3.91 i'm out. (If it ever does.....).
    Reply
  •  
    Jul 24 09:49 AM
    A lot of "Wall Street" faithful "Sell on the News" and move on. After yesterday's pop "Day Traders" take their profit and move on. The stock price is seeking equilibrium on the spread. Hang in there and we should be up by the end of the day. Buy Low / Sell High , might be the last time you get to Buy Low.
    Reply
  •  
    Jul 24 09:52 AM
    At 2.58 for SIRI, XM is worth 11.86. XM is a Buy.
    Reply
  •  
    Jul 24 09:58 AM
    WILD TRADING!!!!!!
    Reply
  •  
    Jul 24 10:03 AM
    Wow. How many articles out there say we are "almost" there. bla bla... WOULD TATE PLEASE VOTE ALREADY!!! i want to see an article that says "tate votes yes." please...
    Reply
  •  
    Jul 24 10:04 AM
    I was just quoting the Wall Stree Journal article. They got that scenario from a former attourney of the NAB. Again, the lawyer clearly says that the strategy of an appeal is not to overturn the decision because that is very unlikely to happen. The strategy is to try to delay the merger until Jan and hope that Obama wins and replaces Martin on the FCC board with a Dem.
    Reply
  •  
    Jul 24 10:06 AM
    To me, that reads that Tate's vote does not mean the next step is consumation bu rather waiting out an appeal... if the NAB does actually appeal. It was a prediction of a former NAB lawyer and who knows how credible it is. But how can any of us doubt that it can happen considering the shananigans we've all witnessed during this debacle of a merger?
    Reply
  •  
    Jul 24 10:11 AM
    I am an attorney, and in my humble opinion an appeal would not "hold up" the merger - the NAB would have to file a lawsuit and ask the judge for a preliminary injunction blocking the merger - the one good thing about our judicial system is that, despite what people may think, judges are often very good at their jobs and (notwithstanding the supreme court) are less about politics and more about justice. Kind of refreshing.
    Reply
  •  
    Jul 24 10:24 AM
    So the Wall Street Journal didn't do their research? I just thought that was a credible enough rag to trust that if they printed that it was possible... then it's possible. I'm not an attorney and certainly no expert on appeals or injunctions, but I can read and there are certain sources I trust... Should I not trust the WSJ? Seems that experts are popping up here saying that what they printed as a possible scenario is not possible at all... if what yall are saying is gospel that is.
    Reply
  •  
    Jul 24 10:32 AM
    So this is s it I guess... this is what we've been waiting for for 17 months. And we're down 7 cents. How exciting.
    Reply
  •  
    Jul 24 10:35 AM
    Yes, the lettuce is approved but alas it is also rotten.
    Reply
  •  
    Jul 24 10:40 AM
    Stinkaroo - just my opinion, and I admittedly do not deal in matters of national importance - but from a legal standpoint the fact is the mere filing of a lawsuit does not hold up the merger per se, a judge would have to issue an order, and there would need to be cause to do so - here I cannot see it - though the NAB will certainly have their day in court to argue that it exists. That being said I cannot see why this took the time it did already - I just hope the judge does not golf with the NAB or the FCC.

    "Should I not trust the WSJ?" I'm sure you've heard this before - don't believe everything you read, even in the WSJ...
    Reply
  •  
    Jul 24 10:45 AM
    For example look at the at the article that just came over Marketwatch -
    "XM-Sirius deal could be bad for consumers"
    Reply
  •  
    Jul 24 10:46 AM
    Just a reminder, the best one was Jim Cramer saying this SIRI stock would double on the announcement, and that is when the stock was around $2.90 per share!!
    Reply
  •  
    Jul 24 10:52 AM
    omagod500 - There will be a number of those saying the merger is bad. If they are wrong, its no big deal, if they are right, they can say I told you so and get some publicity.
    Now you can get Stern, Oprah, NFL, and MLB all on 1 radio and 1 subscription. How can that be bad anyway for the consumer? On my home tv cable, I can get ESPN, CNN, FOX, and all other channels without having to use 2 different cable providers. It just makes sense. The competition is the ipod, regular radio, and others for SadRadio and its Direct TV and fiber optics for cable.
    Reply
  •  
    Jul 24 10:57 AM
    stinkaroo, no more gospel than their scenario, but use some common sense. Possible is not probable. That's what I'm saying.

    oma
    Reply
  •  
    Jul 24 11:13 AM
    What is the price of sirius going to be when XM shares halt trading and SIRIUS/XM are one company?
    Reply
  •  
    Jul 24 11:14 AM
    By the way... That $19.7 mill isn't fines but rather "voluntary" contributions to the U.S. Treasury. What a crock of crap!!!
    Reply
  •  
    Jul 24 11:15 AM
    cos. I didn't really offer a probability factor. I did state that if it is possible then don't be surprised because I'm all surprised out after following this train wreck for so long. I do think that if it is possible, then expect it... I guess the possibility, for me at least, is the real question. Certainly none of us expect the NAB to NOT exercise a "booby-trap" if it is available to them... right?
    Reply
  •  
    Jul 24 11:23 AM
    If it is possible for NAB to file an appeal they will do it. And whether or not it has merit or not it doesn't really matter. Stock price will stay depressed as long as any type of B.S. is going on.... maybe that is why it's not "popping" today like we all thought it would. Still no "official" approval yet though... i'm getting fed up. big time.
    Reply
  •  
    Jul 24 11:30 AM
    C0s1000.......... just bought another 241s. of xm at 10.00. Need to find something to sell, so I can buy more.
    Reply
  •  
    Jul 24 11:39 AM
    The spread will bring SIRI down... Keep an eye on XM. SIRI shouldn't rise again until spread is met. Unless I underestimate the buying power of the emotional trader.
    Reply
  •  
    Jul 24 11:39 AM
    Why are you buying more? The stock has already peaked.
    Reply
  •  
    Jul 24 11:47 AM
    Bababooie speaks the truth - anyone looking to get in right now would be wiser to buy XM - the only action Sirius is gonna see until the merger is consumated and XM ceases to exist is day traders and short term buyers selling and taking their profits. Unless the spread equalizes out, which it will if enough people are purchasing XM - as I type that figure is $11.96 (with Siri at 2.60).
    Reply
  •  
    Jul 24 11:50 AM
    Hairpie - No, you'll have to buy the "interoperable&qu... radio when it is eventually available, unless they decide to simulcast channels on both services, which seems like a good idea for sports and Stern/O&A. Most of the music channels are duplicative and most of the rest don't get more than a few thousand listeners, so why bother?

    As to the lawsuit questions, as a securities lawyer this is not my area, but as I understand it, the NAB would have to prove an immediate and irreversible harm to get an injunction. Since this merger could theoretically be undone, that is probably not going to happen. I'm not sure if the NAB could appeal either/both of the DOJ and FCC decisions. I suppose they could initiate private antitrust action, since the DOJ review is intended to protect consumers, not competitors. Either way, any lawsuit on a subject this complex and a merger already exhaustively vetted by two federal agencies will take several years to wind its way through the system. Then, even if they win, what are the damages? The USFL sued the NFL, won, and was awarded $1.00 (by statute damages are tripled, so they got $3.00). If the goal is to delay the merger, I don't see how it works. If the goal is to get damages, well, it may possibly cost SiriusXM (or whatever they go by at that point--GoogleRadio?), but so what?

    I say, rest easy. You can sue anyone for anything. It usually comes to nothing except legal fees for both parties.
    Reply
  •  
    Jul 24 12:08 PM
    My god, What the hell did I say, yesterday. Give it time besides you guys, we have said all along it would not go more then up to 3.8 thats really not that far away. Tyler has said it, watch for the NAB to come out with this crap, about a law suit, it would effect the stock price. Be smart, if you cant be that then have common sense.

    stinkaroo, go to the WSJ article look what I said yesterday under "jt". I am not a lawer and I said the same thing "omagod5oo" said. God dam common sense thats all it takes. You can also go to the Sirius Buzz forums, zurcran, homer and I, talk about this in more detail. homer985 as usual gives a detailed lay out (goto "NAB: National Appealing Broadcasters?") All in all it says what I was saying on the WSJ article.
    Reply
  •  
    Jul 24 12:26 PM
    Talking to subscribers mostly (and maybe investors who might think this means something):

    Is anyone else's receiver acting strange? Mine did the "updating channels" thing yesterday, which it has done once or twice before in the three years I have owned it - then it did it again today, and when it did it today it reset my reciever, and I lost all my presets and all artists and songs stored to memory...

    Is it possible to add an artist or song without catching it on the radio and storing it to memory?
    Reply
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