Use Caution On Merger Speculation
While there has been a substantial amount of time that has passed since the early December merger rumors, there has been nothing concrete to indicate that any decision is imminent. Most sources seem to tie back to Briefing.com on this latest speculation. It is interesting to note that analysts have not touched this rumor as yet, and one would think that if it was indeed concrete that reports would be crossing the wires already.
Perhaps the best strategy for investors is to continue with your strategy prior to all of the speculation that existed today. in point of fact, the likelihood of the merger passing remains the same today as it did yesterday prior to the swirling rumors. personally I believe that the DOJ will indeed act first, and that they were likely close to some action when analysts Peck and Cowen published reports late in Q4. Those reports generated so much press that it probably became politically impossible for the decision to be announced, and thus a longer wait happened.
Use caution with regard to the merger, but keep your eye on the news.
Position – Long Sirius, XM
Another important factor is that the Official “FCC Items on Circulation”
dated 18 JAn 08 does not show XM/SIRI.
http://www.fcc.gov/fcc-bin/cir....._items.cgi
However, since that list gets updated Friday’s you might do well to
glimpse Fridaynight after officehours.
No circulation, no decision.
one of these days, I’m gonna wake up and casually click on my link to siriusbuzz. I won’t be looking for anything in particular, it will just be out of habit. But after many months of waiting I’m gonna see a headline which will drag a nice smile across my face.
>>> Those reports generated so much press that it probably became politically impossible for the decision to be announced, and thus a longer wait happened.
I’m not disagreeing (I, too, believe it is one possibility) — but I wonder what about the announcement you think might have been “politically impossible”?
Cowen went first with speculation. That was followed by Peck. Pecks report was very specific in nature. It called for a imminent merger decision on Friday or Monday, and that the staff was against but the leadership would override that decision and move forward.
Peck is well respected, and in my opinion would not have issued such a report unless he had what he considered a very good source.
If this report was indeed pretty accurate, the DOJ could not possibly render their decision. If they had, it would have opened up a ton of investigation and oversight.
At this point members of congress drafted official letters citing that the DOJ appeared to be rushing to a decision (how these congressmen consider several months of looking at this merger “rushing” is another debate altogether). As you well know, these official letters were likely preceded by phone calls and conversations.
Thus, if indeed Peck was on the money, the publicity that surrounded his report would have made the DOJ stand still and wait.
Am I sure that this is the case? No. However, I am sure that political pressure has been an ingredient in the process.
Isaac….
While highly unlikely, the FCC could hold a special meeting and vote on the issue without having brought the issue to the items in circulation list. I woulod be highly surprised if this route was taken
>> If this report was indeed pretty accurate, the DOJ could not possibly render their decision. If they had, it would have opened up a ton of investigation and oversight.
I’m unclear on why you believe it would have started any investigation. DOJ had certainly had ample time to make a decision, so the timing wouldn’t have been a factor. What about Peck’s remarks makes you think it could have been a political problem?
I’m not challenging your conclusion; as I said, I think it is entirely possible this is a factor. I’m just unclear on whether you and I are thinking similarly about WHY it would have created a political problem…
“Isaac….
While highly unlikely, the FCC could hold a special meeting and vote on the issue without having brought the issue to the items in circulation list. I woulod be highly surprised if this route was taken”
yet — BennieB did it that way the other day, 1 hour before the bell, didn’t he?
Out of the blue, prior to schedules set in concrete?
Anything seems thinkable at this stage…
Frontmed
I agree that the DOJ has had ample time. However, there were congressmen who seemed to feel that the DOJ was “rushing” to a decision.
Politics has been a factor in this throughout the process. From the beginning, there were congressional hearings relating to the merger.
While congress has no real play in the process, they do have the power of oversight, etc.
Some groups who are against the merger are well estab lished, and have PAC’s that have been regular contributors to many in congress. Because they have a long standing relationship, they will get their opinion expressed to members of congress.
The “threat” of oversight, inquiries, or investigation is something that the folks at the DOJ as well as the FCC are well aware of. It is perhaps why the agencies have been quite particular throughout this process.
If a leak created Pecks report, then a congressman would have “reason” to seek oversight.
>> If a leak created Pecks report, then a congressman would have “reason” to seek oversight.
I don’t necessarily think a leak would do this.
I do think the character of what was leaked could have had something to do with it, however — the fact that the DOJ Brass were going against advice of the staff (according to the leak) might have been a problem, however.
While management has every right to make that call, they need to have a reasonable explanation for doing so.
If the staff recommendation was to deny the merger, it was because after extensive research (which the staff does, not management) they found that the merger would be anticompetitive and therefore should be denied (an obviously correct finding).
I think it is possible that management wanted some time to rejigger the facts to get the result they wanted, i.e., approval — without looking foolish for ignoring the advice of their own staff.
Frontmed….
It is more about posturing than anything else, and the pecise nature of Pecks report allowed congressmen to posture.
Whether the staff actually was/is against the merger is not really known. Whether the staffs finding are correct or incorrect would be a matter of opinion
The rumor about the staff and management having differing opinions actually first surfaced with the Cowen report a few weeks prior.
Either way, this is conjecture at this point.
>> Whether the staff actually was/is against the merger is not really known. Whether the staffs finding are correct or incorrect would be a matter of opinion
It is conjecture as you say. But if these most-respected industry analysts made the statement, it came from somewhere they believed to be credible.
And it is true the staff opinion is just an opinion, but you would have to agree that if they DID recommend against, that would constitute the most informed opinion on the subject. The staff knows what it is doing and does not have the prerogative to consider political aspects of the case (they do, presumably, recommend as to the hazards of litigation and precedent). Management, of course, would be swayed by political considerations.
Latest review/update for today’s Friday Jan 25 2008 the FCC Items on Circulation list:
http://www.fcc.gov/fcc-bin/cir....._items.cgi
NO MERGER Listing yet.
Too busy auctioning the 700 MHz frequncies?
Big money.
Enjoy your weekends — Isaac