DOJ Decision Ready?
After reviewing analysts notes, and watching all of the activity that has happened over the past month, I have come to the conclusion that the Department of Justice will likely come to a decision regarding the Sirius and XM merger by Friday. The initial speculation outlined by Tom Watts of Cowen a few weeks ago spoke to the fact that the staff of the DOJ was seeking to block the merger but that Burnett would over rule the staff and recommend that the DOJ not take action against the merger.
Since those comments there have likely been some busy days at the Department of Justice. Likely, Barnett is trying to find a way to come to a unified decision with the staff. This would involve deeper discussions with Siriusand XM as well as an additional review of pertinant data. It is my assumption that these talks have been going on over the past few weeks, and that there has been enough time to hammer out an agreeable decision.
Analyst Robert Peck last week stated that he felt the DOJ decision was immenent and would be passed down this past Friday or Monday. The Peck report garnered a lot of attention, and while a decision was likely close, there were likely a few pieces still left to weigh out. Additionally, given the amount of attention, the DOJ, even if they were ready this past Monday may simply wait to announce.
The DOJ and FCC do not operate in a vacuum. These regulatory agencies share information and work together on items such as this. For their part the FCC has part of the merger in their Items In Circulation list. This circulation happened on November 20th, and is a step towards the FCC brining a matter to a vote. Now that this item has been “circulated” for a couple of weeks, the timing is getting to a point where the commission can make their decision. Most people expect the DOJ to announce first, and it is anticipated that the FCC will act on this matter this quarter.
Looking at the timeframes involved, it is quite possible in my opinion that we see an announcement from the Department of Justice this week. Quite often where there is smoke, there is fire. The speculation began with Watts, and then it was Peck that felt a decision was close. Last minute negotiation internally in the DOJ, and last minute negotiations with Sirius and XM have likely happened, and we now simply await the press release from the Department of Justice.
Sector watchers should keep well in tuned for the coming week.
Position – Long Sirius, Long XM
Who is Burnett you are referring to in your commentary? Is that supposed to be Thomas Barnett, the assistant attorney general for the anti-trust division?
typo. Thank you for pointing it out. It has now been corrected.
No problem, I just wanted to make sure there wasn’t a new player in the arena.
Pure speculative conclusion. Could be fri, next week, next month. Also decision could be either way
Speculation has to happen. That is what investing is all about. The degree of speculation is what is important.
1. The DOJ has had their requested information for some time now.
2. The DOJ has expressed that they are working the issue as quickly as possible.
3. It has been reported that the staff had come to a recommendation. If indeed this is the case, then the review likely virtually complete.
4. It has been reported that the staff and Barnett are not arriving at the same conclusion. By nature, there would likely be an attempt to unify. This could happen internally or with input from sirius and XM. I believe that concessions, guarentees, etc. have been on the table for at least a few weeks.
5. If these discussions were able to reach a conclusion, then a decision could be immenent. Peck stated that he felt a decision was very close.
6. The DOJ will not simply sit on this forever. They have to arrive at a conclusion at some point.
7. The FCC already has the issue in their circulation file, which means it is being discussed.
8. If the FCC were to decide first, it would force the hand of the DOJ. I do not see this happening. I look for the DOJ to announce first as is typical.
9. The FCC has stated that they anticipate bringing the matter to a vote in Q4. There are only a few weeks left in the quarter.
Could this go past the end of the year? sure. However, given the information that we all have available to us does it seem likely to take that long? That is where opinions come into play. My opinion is that the DOJ will announce any day now, and then the FCC will follow up after the DOJ announcement. I could indeed be wrong, but there is a basis for the opinion I arrived at.
You are reaching for shit now man.
It’s all specuation. Analysts reports all of it. No one knows for sure anything.
The longer it drags on the worse it is for approval.
For the most part the timing of the DOJ announcement is less important – whether yes or no is critical. And in that regard the datapoints remain mixed. Even if we assume that staff is against and Barnett was for, the risk of Barnett going the staff way remains. This entire process has become a farce.