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.
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