Search »

BofA Analyst: Satellite Merger Gets 50 Percent Chance, at Best

Although executives of XM and Sirius say they are confident that the proposed merger will pass regulatory hurdles easily, some analysts believe the battle will be an uphill one.

Jonathan Jacoby, an analyst with Bank of America, believes the chances of the deal getting FCC approval before the end of Q1 next year are less than 50 percent, writes Mediaweek. Jacoby thinks it possible that the the National Association of Broadcasters could seek a legislative solution to block the merger. The NAB, in its turn, said it would be “shocked” if federal regulators permitted the merger.

Bear Stearns analyst Robert Peck, on the other hand, said earlier this week that he believes a merger would pass regulation.

Satellite radio currently reaches only 10 percent of the potential market and pulls in just a fraction of ad dollars.

Mel Karmazin, CEO of Sirius who has been named CEO of the new company, points out that there is plenty of other competition in the market, such as terrestrial radio, HD Radio, internet radio, iPods, cell phones, and cars with MP3 jacks.