Satcasters Enjoy Stock Bounce After Adelstein Offer
July 18, 2008 at 11:27 AM (PT)
One day after FCC Commissioner JONATHAN ADELSTEIN surprised observers by offering to sign off on the XM-SIRIUS merger -- if added conditions were met (NET NEWS, 7/17) -- shares of the two satellite radio companies enjoyed a positive day on Wall Street. As of 2p ET, SIRIUS stock has risen 14 cents, or 6.7%, to $2.24, while XM is up 16 cents, or 1.9%, to $8.60.
ADELSTEIN's additional conditions include a six-year cap on price increases, a set-aside of 25% of channels for non-commercial and minority programming, and hardware that can pick up HD programming. According to 24/7WALLSTREET.COM, "Investors appear unconcerned about the concessions; they simply want the FCC to grant approval so it can finally move forward." The report predicts that the satcasters will agree to the added concessions just to get the deal done.
What seems to have been forgotten is that ADELSTEIN, a Democrat, wasn't expected to hold the deciding vote. Previous news sources all pointed to Republican Commission DEBORAH TAYLOR TATE (NET NEWS, 7/14), who reportedly is leaning to okay the merger as currently proposed despite fierce lobbying to vote it down. In that light, ADELSTEIN's vote would just be icing on the cake.
It appears SIRIUS honcho MEL KARMAZIN and satcaster executives face a choice: Accept ADELSTEIN's added conditions and guarantee FCC passage of the merger, or bet their house on TATE and hope that ADELSTEIN's offer will still be there should she vote no.