With the pending merger of XM Satellite Radio (Nasdaq: XMSR) and Sirius Satellite Radio (Nasdaq: SIRI) about to enter its 13th month, Sirius CEO Mel Karmazin is starting to lose his patience.
Speaking at the Bear Stearns Media Conference, Karmazin indicated that he's growing frustrated by the hoops that XM and Sirius have been forced to jump through in getting the deal approved by the Department of Justice and the FCC.
"If there was a big problem with the merger, it wouldn't take the DOJ this long to figure it out," he is quoted as saying in a Deal Journal blog entry yesterday. "This is really not that complicated."
Karmazin points out that XM and Sirius have turned in a combined 12 million pages of requested documents to regulators in August alone. With 140 attorneys reviewing documents -- pass or fail -- this is becoming a costly marriage for the two satellite radio providers.
No one ever bet that the combination proceedings would be a cakewalk, but as Sirius and XM made concessions to address regulator fears -- like promising lower-priced plans, wider programming, and eventual interoperability of receivers -- there is little reason to keep XM and Sirius burning through even more of their limited greenbacks on a deal that should have been either immediately killed 13 months ago or approved a few months later.
That's the problem. Regulators should never be forced into making hasty decisions. Sticky deals require careful vigilance. It shouldn't matter that XM and Sirius are losing money as operating concerns in that time, but it should matter that the decision's delay is forcing them focus less on running their companies. Whether it's draining legal resources or deposing executives, deal fatigue is a vacuum of both time and money.
XM and Sirius are right to keep their respective businesses going as usual, but their actions reveal that they are inching toward a successful union. In recent months, XM has undone XM-specific branding deals with both Starbucks (Nasdaq: SBUX) and Time Warner's (NYSE: TWX) AOL. Both companies have dramatically cut back on their ad budgets, holding back on the need to set one service apart from the other.
In short, they are practically living together. If this were a monopoly, it would start to smell of collusion. But it's not a monopoly, as everyone else is beginning to realize.
Why are regulators taking this long to make the right -- and now blatantly obvious -- decision? If you think Karmazin is angry now, just see how furious he'll be when he's a month older and still left scratching his head.
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