By Peter Kaplan and Randall Mikkelsen 2 hours, 1 minute ago
WASHINGTON (Reuters) -
Sirius Satellite Radio's $4.59
billion purchase of rival XM Satellite Radio was given
antitrust clearance on Monday as the Justice Department
concluded consumers have many alternatives, including mobile
phones and personal audio players.
Investors sent shares of both companies sharply higher even
though the Federal Communications Commission must still approve
the combination of the only two U.S. providers of satellite
radio, a deal first announced in February 2007.
In a victory for Sirius Chief Executive Mel Karmazin, who
lobbied hard for the deal, the Justice Department agreed the
satellite radio companies face stiff competition from
traditional AM/FM radio, high-definition radio, MP3 players and
programming delivered by mobile phones.
"Competition in the marketplace generally protects
consumers and I have no reason to believe that this won't
happen here," Justice Department antitrust chief, Thomas
Barnett, told a conference call with reporters.
The traditional radio industry, consumer groups and some
U.S. lawmakers had criticized the deal, which would bring
entertainers such as talk show host Oprah Winfrey and
shock-jock Howard Stern under one roof.
The National Association of Broadcasters, which fought
against the deal, said the Justice Department had granted XM
and Sirius a "monopoly" and called the decision "breathtaking."
Sirius and XM, which are losing money, each currently
charge subscribers about $13 a month for more than 100 channels
of news, music, talk and sports.
New York-based Sirius' programming includes lifestyle guru
Martha Stewart and NFL Football while Washington, D.C.-based XM
is home to Bob Dylan's radio show and Major League Baseball.
The Justice Department said the combination would lead to
"substantial" cost saving steps such as consolidating the line
of radios they offer. It said those savings would "most likely
to be passed on to consumers in the form of lower prices."
XM stock ended Monday up 15.5 percent to $13.79, while
Sirius closed up 8.6 percent to $3.15, both on Nasdaq. At that
price for Sirius' stock, the deal, in which 4.6 shares of
Sirius are to be exchanged for each XM share outstanding, is
worth $4.59 billion.
AWAITING FCC DECISION
The antitrust decision shifts the spotlight to the FCC,
which must determine whether the XM-Sirius is in the public
interest, and whether to enforce its 1997 order barring either
satellite radio company from acquiring the other.
A source at the FCC said Chairman Kevin Martin has yet to
make a proposal either approving or opposing the XM-Sirius
combination, but has asked the agency's staff to draft
documents for different possible outcomes.
This source said the FCC could be strongly influenced by
the Justice Department decision. "I think it would be hard to
go in the complete opposite direction," said the source.
Analysts at Stifel Nicolaus said the FCC could impose
conditions, such as requiring the companies to adhere to
promises Karmazin made to Congress last year.
Karmazin promised lawmakers that a combined company would
offer packages of channels that customers could pick on an "a
la carte" basis, and that customers would be able to block
adult channels and get a refund for those channels.
In addition, Stifel Nicolaus said, the FCC also may require
Sirius and XM to promise that all existing satellite radios
will continue to work after the companies are combined.
optimistic about FCC approval. "Now it's past DOJ, and we feel
pretty optimistic it will get through the FCC," he said.
The Justice Department's decision provoked immediate
criticism from a key lawmaker in Congress, Senate antitrust
subcommittee chairman Sen. Herb Kohl, a Wisconsin Democrat.
Kohl took the department to task for "failing to oppose
numerous mergers which reduced competition in key industries,
resulting in the Justice Department not bringing a single
contested merger case in nearly four years."
"We urge that the FCC find the merger contrary to the
public interest and exercise its authority to block it," Kohl
said in a statement.
Sirius and XM said in a brief statement that they had
received antitrust clearance and that their deal was still
subject to FCC approval.
(Additional reporting by Diane Bartz; editing by Tim
Dobbyn)
No comments:
Post a Comment