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Analysts Mixed on XM/Sirius Merger Prospects

David Bank and Ryan Wineyard of RBC Capital Markets last Thursday gave the XM/Sirius merger a 50 percent chance of success, saying the odds applied both to the upcoming DOJ ruling, expected in the next two months, and the FCC decision, which is expected sometime before year’s end.

Meanwhile, Bank of America’s Jonathan Jacoby has lowered his odds of merger success to 30 percent, writes MediaPost.

The RBC analysts say the most important issue regarding the merger is “market definition, which we continue to believe should be broadly defined.” That definition refers to the competitive arena in which satellite broadcasters operate. If the market is defined simply as satellite radio, it is more likely that regulators would refuse to allow the merger, but if the market is defined as including MP3 players, streaming radio via the internet and HD radio, it is more likely that the merger will go through.

BofA’s Jacoby says Sirius and XM’s legal filing, which was in favor of reversing the regulatory statute from a decade ago that prevents them from merging, was weak and unconvincing.