FCC Puts Merger In Writing
The FCC has finally put the merger between Sirius and XM into writing. The documents, made public after 4:00 PM on July 28th outline the regulatory approval of the merger. Four of the five commissioners also offered published opinions on the vote.
This official document, the lack of any action by the National Association of Broadcasters, and what should be the final touches on financing issues should enable Sirius and XM to consummate the merger in the next few hours. When this happens, XM shares will no longer exist.
Full press release after the jump…
FCC PRESS RELEASE
On July 25, 2008, the Commission voted to approve the application of Sirius Satellite Radio Inc. (“Sirius”) and XM Satellite Radio Holdings Inc. (“XM”; jointly, the “Applicants”) to transfer control of the licenses and authorizations held by Sirius and XM and their subsidiaries for the provision of satellite digital audio radio service (or “SDARS”) in the United States. The Commission found that grant of the application, with the voluntary commitments made by the Applicants and other conditions, is in the public interest. The transaction will benefit consumers by making available to them a wider array of programming choices at various price points and by affording them greater choice and control over the programming to which they subscribe.
Highlights of the Commission’s action are noted below, followed by details concerning the grant of the application and the separate resolution of certain enforcement matters.
• After reviewing the empirical data available as part of its competitive analysis, the Commission determined there was insufficient evidence in the record to predict the likelihood of anticompetitive harms. It therefore evaluated the application under “worst-case” assumptions, i.e., that the relevant market is limited to SDARS. This approach permitted the Commission to protect consumers from potential adverse effects of the transaction while also allowing the Commission to balance potential harms against potential public interest benefits. The Commission concluded that the merger, absent the Applicants’ voluntary commitments and other conditions, would result in potential harms. With those commitments and conditions to mitigate the harms, however, the Commission found the transaction to be in the public interest. All of the voluntary commitments must continue in effect at least three years after consummation of the merger.
• The Commission accepted the Applicants’ voluntary commitments to:
– Cap prices for 36 months after consummation of the transaction, subject to certain cost pass-throughs after one year. In addition, six months prior to the end of commitment period, the Commission will seek public comment on whether the cap continues to be necessary in the public interest and will determine whether it should be extended, removed, or modified. The merger approval is conditioned on the Commission’s ability to modify or extend the price cap beyond the three-year commitment period.
Offer to consumers, within three months of consummation of the transaction, the ability to receive a number of new programming packages, including the ability to select programming on an a la carte basis.
– Make available 4 percent of its capacity for use by certain Qualified Entities, and an additional 4 percent of capacity for the delivery of noncommercial educational or informational (“NCE”) programming, which will enhance the diversity of programming available to consumers.
– Offer interoperable receivers in the “retail after-market,” i.e., receivers available at retail outlets for installation in consumers’ automobiles or homes, within nine months of consummation of the merger.
– Refrain from entering into any agreement that would grant an equipment manufacturer an exclusive right to manufacture, market, and sell SDARS receivers. Applicants also commit to refrain from barring any manufacturer from including in any receiver non-interfering hybrid digital terrestrial radio functionality, iPod compatibility, or other audio technology. In addition, Applicants commit to make available the intellectual property needed to allow any device manufacturer to develop equipment that can deliver SDARS.
– File the applications needed to provide Sirius satellite service to Puerto Rico via terrestrial repeaters within three months of the consummation of the merger.
• Although the Commission found it unnecessary to impose a condition requiring the inclusion of hybrid digital radio technology in SDARS receivers, it recognized that important questions have been raised about hybrid digital radio that warrant further examination in a separate proceeding. The Commission therefore committed to initiating a notice of inquiry within 30 days after adoption of the merger order to gather additional information on the issues.
• The Commission reiterated that SDARS licensees are already prohibited, independent of the merger, from using terrestrial repeaters to distribute local content—including both programming and advertising—that is distinct from that provided to subscribers nationwide via satellite.
• The Commission prohibited the merged entity from entering into agreements that would bar any terrestrial radio station from broadcasting live local sporting events.
• Concurrent with grant of the application, the Commission repealed the prohibition on the merger of the two SDARS service providers as set forth in the 1997 SDARS Report and Order. For the same reasons that it approved the merger, the Commission concluded that repeal of the rule prohibiting the merger will, on balance, serve the public interest.
• In separate actions on July 25, 2008, the Commission approved Consent Decrees between it and each of the Applicants. The Consent Decrees terminated the Commission’s investigations into the Applicants’ compliance with the FCC regulations governing FM modulators and terrestrial repeaters. They provide that XM and Sirius will voluntarily contribute approximately $17.4 million and $2.2 million, respectively, to the U.S. Treasury and take additional remedial measures.
Action by the Commission, July 25, 2008, by Memorandum Opinion and Order and Report and Order (MB Docket No. 07-57, FCC 08-178). Commissioners Copps and Adelstein dissenting
Position: Long Sirius, XM;
There always seems to be something missing. Why isn’t Tate’s statement posted by FCC ?
Can I have your shares?
How ignorant can one be. The only way to merge and to become a powerhouse was to do this refinancing, and with the credit markets in crisis, there was no other way to do this. Did you really think Mel or anyone else was going to wave a magic wand over Wall Street and Sirius would trade up at $10 today? The merger should be completed within a few hours, and then the attention can be turned to other matters. As I see it, the bad news is out of the way now, and the focus can be turned to running the business. I am sure in the interim plans were formulated for when the merger was approved. And finally, it is 350 million shares, not dollars.
PAIN !!!
Mel and Gary better start buying a million shares each real soon.
Pat, If you thought Mel stunk as a CEO, then you should have never bought SIRI or should have sold it after you heard he was coming to SIRI. You have nobody to blame but yourself. Who are you going to blame if you sell and then it gos up, Mel again. There is a old saying; “that if you cant stand the heat, get out of the kitchen”. I think it is time for you to put your pots and pans down and leave.
I have said it many times in many ways. This merger is just the first battle of many. Mel has won this one, and he will win the rest of them and lead the combined company to victory in the end. Call it trust or research of everything he has done before. The fact is he as a winner in everything he has done. That is a track record I will get behind.
I think a lot of tiny investors expected Sirius stock to magically jump up to a million dollars a share, because they get their investment advice purely from Cramer.
The merged company will be strong, but it’s not going to suddenly double it’s share price over night.
Tyler/Brandon, good call on the FCC making this official today. Your writing has really become sharp over the past 3 weeks. Keep up the good work. BTW, interesting that Clear Channel unveils their ‘900 channel’ internet radio today, no? Would be interesting to know the breakdown–how many channels are for minority programming and educational content.
Where is the press release from Sirius/XM, what will the new company be called?
Well if I had any balls I would sell sell sell!!! Mel definately left common shareholders out to dry! Never bought because of Cramer’s idiotic show but what a hippocrit!!! XM will trade tom. by the way. See you all at the bar!
“The merged company will be strong, but it’s not going to suddenly double it’s share price over night.”
Sure has no problem nearly halving overnight.
Are they EVER going to end the bleeding? Get the FUCKING THING DONE already. Another day of trading for XMSR? Oh man..the stock could drop to $1.40 tomorrow. Is there no end to this? I’m getting slaughtered. Maybe what we need is some really BAD news, since these stocks go into the crapper every time there’s good news. I’m just worn out.
The arb nearly closed in afterhours…. for those of you at Siriusbuzz, writing covered calls at 3 & 4 dollars. Congrats. I’m sure today’s price action wasn’t so painful.
I wasn’t expecting profitability until 2011. The best thing that could happen would be if Stern & Oprah starting buying shares. I won’t sell my shares at this level but I am diversified and won’t panic. I remember when XM traded at $1.66 and SIRI at 39 cents. I do not think they’ll go bankrupt so I’ll stay the course.
c’mon, tell us how you really feel PATRICK RODGERS.
Does anyone find it remarkable how the arb closed in after hours. And sure, XM has a “premium” over SIRI, but it was achieved by taking both stocks down, not by taking XM stock up.
It makes me wonder about the arbiters… Those of you following the spread know that it’s been very wide, as if completely ignored. Tyler wrote an article about the spread not too long ago. He noticed the wide spread.
It’s almost as if this abiters, or the big money players, knew it didn’t matter for one reason. I can’t imagine what that reason would be. Anyone?
And a sell-off was timed precisely at the same time cramer began bashing the common stock. How peculier.
Like XM refinancing was big news? Sure we knew it had to be done; we didn’t know how. How come this wasn’t reflected in the c/s of each company already?
Siriusbuzz. Answer this for me. There is indeed some fishy business with the closing of this merger. What is most alarming to me…. where’s MEL!?
zach401, You are correct, you are not going to get much closer on the arb then .30 cents from what I just saw in AH trading. Maybe another 10 cents at most.
Seriously Sirius, I agree, and I am with you on that.
Pat, as I said, you have only yourself to blame. You could have got out at anytime.
After four years of being an investor and customer I’m sorry i ever heard of satrad, sirius, mel, gary or howard.
I was surprised to see these 2 stocks take a hit. I thought they would have gone up. But I think the combo is a real winner. The product is great and they have just scratched the surface with customer penetration(no pun intended). I know it’s tough right know after waiting almost 2 years. But I am thinking very strongly about buy more shares. It will bring my average share price down. I think in the long run it’s a winner! Also I think once the ink drys your going to hear some great things from Mel about what’s in store including some new inovations that couldn’t be spoken about till it was all said & done.
Wow, I never really expected this. I have been a subscriber of Sirius for years for years now, and really enjoy their programming. I invested a small amount last year at the talk of the merger and I have continued to lose money since. I also recently purchased another 500 shares last week at the price of 2.40. I guess that was still too high.
I am still a young investor, however I am learning quickly that some stocks in which you just can’t win.
Of the 16 posts as of this writing, you people are all very sad. Did you expect Mel to wave a magic wand and poof, the stock price opens at $50 a share? This is a process, and a very well crafted plan has been put in place and is being executed step by step. If you want instant gratification, then go into your bathroom, close the door and get to it already. Mel is a legend, and he knows fully well what he is doing. As for Howard, he just lost tremendous leverage. You think Sirius has to give him anywhere near the money he got to join them? When they had only 600,000 subs? That as of tomorrow, they are the only game in town, with over 18 millions subs and growing? People please, have a little bit, even an ounce, of brain here.
Hey, Nicholas I take offence to that.
“Did you expect Mel to wave a magic wand and poof, the stock price opens at $50 a share?”
No, we just expected the fucking ridiculous pain we’ve been put through for a year and a half to end. It didn’t.
I Didn’t expect the stock to skyrocket. I DID expect that once this would over I’d stop losing 15% a day on this crap though.
John
No offense intended to you. I didnt read each post, after the first few……
I happen to agree with you. I bought in due to Mel, and Mel alone. He is a legend, and he will pull this off. I have the complete faith in him and in Sirius. First bought in as of October 2005, have been adding shares every month since then. Just hoping now that the deal has been announced, that it has also been consumated so that perhaps the stock can rebound.
haha. There are a few voices of reason here Nicholas, so don’t include everyone in that statement. =)
Sirius/XM is a long term win, not an overnight success. It has taken a lot of grit and determination to get to wher they are at today.
Patrick: You want to see Mel’s bright white shiney teeth, look for them tommorrow when he comes out for the statement of merger consumation and explains how all of this debt refinance is actually a plus and how they plan on switching the rest of the high interest debt back into long term convertibles. You will see your stock go up, but not to the 50 or 100 bucks a share you may be expecting. I placed a sell order for my shares of Sirius that I bought for the merger speculation at $4 a share. I really dont think that will get hit, but Im keeping the rest of my shares for long term.
If all of this is bothering you THAT much patrick: TURN OFF THE COMPUTER AND LAY DOWN FOR A WHILE.
Nicholas, I was just messing around, you cant offend me, I am to much of a dick head for that.
after buying shares at nearly 4.00 (minimal shares) and alot more at 2.40, I am actually considering buying some more on the price we are at now. Just to balance it out a little more, I mean, it will be kind of hard to get much lower.
I still have faith that the company can turn this thing into something positive.
Or am I just crazy in thinking that it won’t go much lower?