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David Wants to Buy Goliath

XM and Sirius are constantly locked in a war of words that often extends from their programming, or marketing campaigns, today took a turn toward the boardroom.  As earlier today, Sirius’ CEO Mel Karmazin said during a speech at the Museum of Radio and Television, that Sirius would be interested in buying its competitor XM Satellite Radio. 

Well, that was enough of a breath of fresh air to put Wall Street in motion and move both companies’ stock prices in a positive direction   (a departure from their recent trends downward).  Ironically, and even though Karmazin acknowledged it, such a transaction would be a major regulatory hurtle.  Further, it is particularly interesting how many observers often portray a merger as an exit strategy for the infantile satellite radio companies.   The problem would be, as Karmazin hinted, that the FCC would be quite reluctant especially, since in its request for bids for spectrum on March 6, 1997 it noted that: "Bidders may win only one license, and as such will be permitted to be active on only one license at a time."

Regardless, despite the legalese, I guess Karmazin’s confidence struck a cord with the Street.  To his credit he’s doing his job and working to move the stock in a positive direction, which of course is also creating more value for the company’s shareholders regardless of the likelihood of such a transaction.

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