Analyst Tom Watts of Cowen issued a positive note today on the Sirius and XM merger. In the report he speaks of rumors that the Department of Justice will approve the merger as early as next week.

REPORT EXCERPTS:

Reports this morning that Thomas Barnett, Assistant Attorney General for the DoJ's Antitrust Division will approve the Sirius-XM merger, have sent Sirius and XM stocks up ~4% this morning in a weak market. The approval would come despite a staff recommendation against the deal which could be heard as early as next week. This pattern of the Antitrust Chief acting contrary to the recommendation ofhis staff would be similar to the DoJ's approval of Whirlpool's acquisition of Maytag. In 2006, Whirlpool bid to acquire Maytag, thereby consolidating the US dishwasher market to a 50% share, and washer/dryer market to a 70% share. The DoJ was reported to be positioning to block the deal. Prior to approval, DoJ staff even started taking sworn testimony from competitors and suppliers to prepare a court challenge to the deal. Ultimately, however, the Antitrust Chief approved the transaction. The report on DoJ actions follows earlier statements by FCC Commissioners suggesting a split decision at the FCC as well, with Republicans over-ruling Democrats in favor of the merger. We continue to expect both DoJ and FCC approval of the deal. Denying the dealwould have to be based on the ludicrous position that satellite radio does not compete with terrestrial radio or any other form of mobile communications. The DoJ and the FCC have always coordinate on past transactions, coming to compatible conclusions. We take encouragement from the reports that a decisioncould be as soon as next week.