Report: XM/Sirius Likely To Extend 'Termination Date'
February 27, 2008 at 8:02 AM (PT)
Amid frequent predictions of an imminent close in the XM and SIRIUS deal, the 53-week long Department of Justice investigation is still underway, writes THE FINANCIAL TIMES, citing reports by DEALREPORTER. MARCH 1st marks the day when both parties could walk away from the deal with no break-up fee. However, a former DOJ attorney said this situation is unlikely, especially when both parties have already invested so much in the process.
Even if the investigation is concluded before MARCH 1st, the FCC will still have to issue a license. A source close to the situation said the post-DOJ process would take at least one to two months but nowhere close to six. The source said the FCC commissioners know the issues, and that he cannot see the deal being "tremendously delayed" thereafter.
The source claimed no knowledge of when DOJ consent would come, and said he would advise XM and SIRIUS to extend the termination date another three to six months to be sure and give the FCC time to act.
On the other hand, the former DOJ attorney suggested that a lengthy extension would signal a lack of confidence in the deal’s ability to pass regulatory muster, a move that would likely be reflected by the market.
A second source close to the situation said he believed the likelihood of approval was more than 50%. However, he did not have a sense when regulators would conclude the review process. When asked why the process is taking so long, he said the current nature of both the DOJ and the FCC is to be slow in coming to conclusions in any transaction viewed as controversial.
An industry lawyer focused on FCC matters commented,"it can’t be a good sign [the deal] has been dragged out for a year." The lawyer said, however, that he heard the DOJ was at an impasse because its staff had leaked information to the press that it did not believe the deal should go through. This is despite a BUSH political appointee’s desire to push it through, the lawyer added.