XM ( XMSR) and Sirius ( SIRI) have scheduled a shareholder vote for Nov. 13, signaling the last leg of a challenging merger application course.
The fate of the merger between the only two pay radio companies lies in the hands of federal regulators who are reviewing the consumer impact and the antitrust implications of the $4.6 billion deal. Observers on Wall Street have been pessimistic about the deal's chances for approval. The Federal Communications Commission has fostered an image of open-mindedness in its public statements, but its final decision remains unpredictable. And the Justice Department's antitrust team seems to have the heaviest burden. The agency must determine that satellite radio competes in the same arena as conventional radio and iPod devices. "No one seems to have an edge here," says one money manager, referring to the uncertain leanings of regulators in the heavily lobbied, hotly contested merger. "It makes these stocks semitoxic," adds the money manager, who has no positions. XM and Sirius have said they are confident the deal will gain approval, but in the special shareholders meeting announcement, the two companies tempered their optimism a bit. "While we believe that this approval will be obtained, there can be no assurance of this or that burdensome conditions will not be imposed as a condition of this approval," the companies say in a filing Thursday. "If such conditions would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the combined company following the merger, the parties may determine not to proceed with the merger," the companies continued. Another money manager who is not involved with either stock predicts that the regulators will spoil the satellite radio fun. "The deal should go through," says the investor. "There's no reason this should be blocked, but I think the government will block it." Sirius shares were down 2 cents to $3.44 and XM shares were down 11 cents to $14.12 in midday trading Thursday. To watch Scott Moritz's video take of this column, click here .