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Sirius Satellite Radio Inc. (SIRI) – XM Satellite Radio Holdings Inc. (XMSR) Deal Gets Congressional Support

A group of Democratic members of Congress have announced support for the proposed merger between Sirius Satellite Radio and XM Satellite Radio. However, this support still may not be able to sway government regulators with the power to make or break the deal.

These members sent a letter to the Federal Communications Commission Chairman, Kevin Martin. They urged him to support the union of Sirius Satellite Radio (SIRI) and XM Satellite Radio (XMSR). Because this merger must receive approval from the FCC, as well as the Department of Justice, this letter was crucial in gaining support.

The group says that this merger will ultimately benefit consumers: “We firmly believe that allowing these satellite-radio companies to merger in order to be able to better meet the content needs of this market on a national basis, with exceptional digital sound quality and no commercials, at relatively low costs to the consumer, is in the public interest.”

The letter was signed by Rep. Sanford Bishop (D-GA), Rep. Corrine Brown (D-FL), Rep. Yvette Clarke (D-NY), Rep. Danny Davis (D-IL), Rep. Eliot Engel (D-NY), Rep. Ralph Hall (R-TX), Rep. Alcee Hastings (D-FL), Rep. Carolyn Maloney (D-NY), Rep. Greg Meeks (D-NY), Rep. Bobby Rush (D-IL), and Rep. Edolphus Towns (D-NY).

Maurice McKenzie, an analyst at investment bank Signal Hills, stated that “he thinks it is unlikely the deal will receive approval because regulators will probably see satellite radio as a distinct service from audio media. McKenzie though is bullish on the pair’s prospects as independent companies. He thinks they can each reach profits and positive free cash flow in the next several years.”

Following the news, shares of Sirius rose 3 cents, or 0.8%, to $3.61; while shares of XM Satellite Radio rose 24 cents, or 1.6%, to $15.26.

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