Satellite deal: Do broadcasters protest too much?

Steve Rosenbush

The proposed merger of satellite radio companies Sirius and XM has elicted a damning response from radio broadcasters. They helped fund a Carmel Group study that has powerfully attacked the deal's central defenese in a Justice Department antitrust review. The satellite radio companies argue that the market has changed, and that satellite radio now competes with iPods, Internet radio and high-definition terrestrial radio. Critics say that's nonsense, that satellite radio is a separate market defined by its government-issued licenses, and that iPods aren't sold as a substitute for satellite radio. Analysts at researcher Stifel wonder if the opposition will be viewed as a defensive maneuver, "highlighting" that the DOJ may consider terrestrial radio a competitor to satellite. Still, Stifel puts the odds of this merger closing at only 55-60%. That's far from a sure bet, although Stifel argues the risk-to-reward ratio may be compelling because the market is suddenly counting on the deal's rejection.