Tuesday, February 20, 2007

Satellite Radio Companies Want to Merge - Will They Be Allowed To?

The market had been asking for this for the past few years. Amid rising losses at XM Satellite and Sirius Satellite, investors were hoping that something could allow these two businesses to reach profitability. It seems that something might be in the cards. Sirius and XM decided to merge yesterday, with Sirius the surviving company and Mel Karmazin the CEO of the new entity. The big question on everyone's mind, of course, is what will the FCC think of this "monopoly." It's going to take a lot of convincing from the satellite companies to convince regulators that the satellite radio business is a small piece of the pie and there are other competing resources that they need to compete with for consumers.

The stocks of both are up nicely in the pre-market, even amid all of the concerns from regulators and analysts who fear that the deal has too many hurdles. Buy the rumor, sell the fact?

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