Share Spread between Satellite Co.’s Indicates Imminent Approval

Junior Justice officials were given a final chance to make their case against the proposed XM-Sirius deal last week, before Antitrust Division Chief Thomas Barnett approves the merger, an inside source told the New York Post.

The spread between shares of the two satellite radio companies is the tightest it has been since the merger was announced a year ago today, indicating that investors believe the deal will be approved. “We believe the stock prices of XM and Sirius have re-entered an ‘imminent approval’ bubble,” according to Mark Wienkes, a Goldman Sachs analyst.

Shareholders of both companies have already approved the deal, and believe an approval could come within days. Wall Street analysts believe the deal will be approved with certain conditions, such as freezing subscription prices for a limited time and making interoperable radios, says Blair Levin, an analyst for Stifel Nicolaus.

The NAB and radio groups like Clear Channel have been vociferously against the deal, claiming that it would create a monopoly. But as Rick Aristotle Munarriz writes on The Motley Fool, “… unless you’ve living under a rock - or at a Top 40 rock station - you’re living in denial if you think that the battle for eardrums has come down to satellite radio vs. conventional radio.”

It is not a battle between terrestrial vs. satellite but between “push vs. pull,” as providers of pre-created content battle the many ways consumers can create their own playlists, he writes.