Did Commissioner Adelstein Drop Hints On Merger?
FCC Commissioner Jonathan Adelstein was interviewed on NPR today, and in that interview a caller asked the Commissioner a question about the proposed merger between Sirius and XM. In his answers, Adelstein indicated that a DOJ decision may be coming soon, and that an FCC decision may come in the first quarter of next year. One has to ask this question though… if the DOJ were to rule against the merger, why would the FCC need to make a decision? Did Johnny let the cat out of the DOJ bag on a positive merger decision? How will investors react to an FCC decision delayed until Q1 if the DOJ approves soon as indicated by Adelstein?
Listeners can hear the entire interview on the NPR website (SDARS section is from minute 12-13:30). The transcript of that conversation can be found after the jump.
TRANSCRIPT
HOST - “Let’s Get Another caller on the line and this is Zack…Zack with us from Poughkeepsie New York.”
CALLER - “Yes Hi. I have a question with regards to the ruling. I was wondering how it might effect the merger between Sirius and XM”
HOST - ” Those are two satellite radio companies. They are the only two satellite radio companies and up until this point rivals…they are trying to merge into one satellite radio company…Commissioner”
ADELSTEIN - ” That merger between Sirius and XM is pending before us and this rule making really has no direct impact on it”
HOST - ” Where is that? It’s pending before you at this point…what’s the time frame that a decision is expected, which way do you think it will go at this point?”
ADELSTEIN - ” We’re not exactly sure. It’s now in the Justice Department as well. It needs approval by the Justice Department and the FCC. The Justice Department hasn’t acted yet acted. We’re hearing that action could be coming shortly but I don’t want to predict for sure, and then sometime after that presumably the FCC would act. I think probably in the first quarter of next year.
CALLER - ” What do they feel is holding up the actual merger?”
ADELSTEIN - “Well it’s a very complicated analysis. There’s a discussion about what the relevant market is. Is it just competition between the satellite companies? Is that a market for satellite radio by itself or do they compete with people like NPR, over the air radio, or do they compete with people who are whistling down the street….I mean that there’s all kinds of questions about what the relevant market is…that the Justice Department and we are wading through now.”
HOST - “Thanks for the call”
The answers are indeed interesting. Adelstein is the first Commissioner to put a time frame on an FCC decision since Chairman Martin’s indication that they were trying to get to a decision in Q4. Adelstein’s comments may mean everything, or may mean very little. However, what we do know is that he is under the impression that the DOJ decision will come soon, and that the FCC is considering the issue actively. Investors stay tuned.
Position - Long Sirius, XM
December 20th, 2007 at 1:16 am Tute Says:
Basically he just told everyone the merger has been approved!! Since the republicans have the majority 3 to 2 the FCC will pass the merger as well.
December 20th, 2007 at 6:16 am Orbitcast Says:
Adelstein: DOJ decision “coming shortly,” FCC decision in Q1…
FCC Commissioner Jonathan Adelstein, one of the two Democratic members of the FCC, spoke with NPR yesterday and gave some insight into the timing of the Sirius-XM merger decision. During the interview on NPR’s “Talk of the Nation,” which focused pri…
December 20th, 2007 at 7:45 am MUSCLE13 Says:
Very good point Tyler. I hadn’t even considered that take until I read this post.
December 20th, 2007 at 10:30 am Anonymous Says:
>>> if the DOJ were to rule against the merger, why would the FCC need to make a decision?
You are way, way off base here.
FCC will make its determination regardless of what DOJ does. If DOJ decides to file suit to stop the merger, FCC will STILL make its decision.
This is Tyler convoluted reasoning at its worst.
December 20th, 2007 at 10:43 am Tyler Savery | Satellite Standard Group Says:
For anonymous…
People seem to love to read between the lines.
Yes, the FCC will render a decision no matter what, but one path is far easier for the FCC than the other.
Think of it this way.
If the DOJ were to rule against the merger, then the FCC stance would be easy and there would be no real need to prolong the process into Q1. The FCC could simply follow suit of the DOJ, and not really have to “make a decision”. The DOJ will have done the dirty work for the FCC.
If the DOJ were to decide favorably, the FCC would then have their part of the equation as center stage. They would deliberate, discuss, speak about concessions, regulations, etc. This would take a bit more time, and perhaps spill into Q1.
Now the only real caveat would be a negative DOJ ruling….Sirius and XM taking the issue to court, and the FCC waiting out the process. Also a plausible situation.
These agencies do not operate in a vacuum. They are well aware of what is transpiring at each respective agency.
It is interesting that Adelstein is speaking of timelines the way he is.
Reasoning at its worst? Perhaps….You are entitled to your opinion, and we are well aware that your opinion will be opposite of whatever my opinion is. This is how it always has been, and that is fine.
December 20th, 2007 at 11:42 am none Says:
what about his comment “or do they compete with people who are whistling down the street” - is he poking fun at the belief that sat. radio competes with all forms of audio media?
December 21st, 2007 at 10:00 am Anonymous Says:
>> what about his comment “or do they compete with people who are whistling down the street” - is he poking fun at the belief that sat. radio competes with all forms of audio media?
This is, in fact, a point worth mentioning — the sarcastic tone may well be suggestive of his line of thought.
This inference is much more sensible than that reached by Tyler.