Sirius Odds - Broadcasting & Cable

Sirius Odds

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With the caveat that RBC Capital trades in the stock of both XM and Sirius, the investment company said Thursday it was calculating the odds of the XM/Sirius merger going through were better than 50-50.

In a report to investors, RBC said that it was predicting Justice Department approval within the next 30-60 days and the fCC following suit by the end of the year, pointing out that the FCC does not usually diverge from Justice’s finding.

One thing RBC saw in the merger’s favor was the a la carte proposals by the satellite radio companies. RBC argues that FCC Chairman Kevin Martin, an a la carte fan if there ever was one, would relish the precedent of programmers offering per-channel program pricing and service that he could then hold up to a cable industry reluctant to do the same.

BUt RBC concede that the decision likely hinges on the definition of the market, which XM/Sirius say is a broad national audio landscape on which they are just one, and not even a particularly large, fixture. Broadcasters say the market is satellite radio and letting the two companies merge would create a monopoly.

RBC says it doesn’t see the administration pushing against the merger and that the FCC will find a way to define the market broadly. For one thing, though this is my addition and not RBC’s observation, Martin and others have pointed to the broader market–particularly online–in arguing that media ownership rules should be changed in light of a world with much more media competition than when they were originally drafted.

The same argument could be, and has been, made for XM/Sirius.

RBC says that the only independent party consistently arguing against the waiver is NAB, but that appears to discount a number of high-powered legislators who have expressed their strong opposition. Given that Cognress is essentially the FCC’s boss, with the caveat that due deference to agency expertise is boilerplate of the relationship, those congressional voices should weigh in the calculation.

Martin has been shooting for the end of the year for approval, but that is tied to the unofficial 180-day shot clock, which seems ot be honored in the breech as much as the observance.

Today (Sept. 6) is the midpoint, or the 90th day–of the XM/Sirius clock (actually more of a timeline)  but remember that the Adlephia break-up between Comcast and Time Warner took 404 days.

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