After various media outlets reported that the FCC reached a tentative agreement to approve the merger between Sirius Satellite Radio, Inc. (SIRI) with XM Satellite Radio Holdings Inc. (XMSR), shares of both companies rose on Wednesday afternoon.
Shares of both Sirius and XM accelerate higher throughout the afternoon after reports reached the wires of a tentative deal. Both stocks rose up about 10%, with Sirius closing up 30 cents at $2.68, with XM finishing up 94 cents at $10.02. Sirius and XM stock also each surpassed their 50-day moving averages and concluded Wednesday's trading at their highest levels since mid-June.
According to media reports, Republican FCC Chairman Kevin Martin has nearly convinced Republican Deborah Taylor Tate to break the current deadlock by voting in favor of the deal.
Wednesday morning, Democratic commissioner Jonathan Adelstein voted against the merger as his demand for further concessions failed to draw support from the five-member regulatory body. His dissenting vote set tied the tally up at 2-2, Tate having yet to still cast her vote.
On Tuesday, Kevin Martin and fellow Republican commissioner Robert McDowell voted to approve the $3.5 billion deal while Democratic commissioner Michael Copps had voted against it on Monday, according to multiple media reports.
The FCC's deal was originally propose by Chairman Martin, which states that the two satellite radio companies may merge as long as they make available to consumers radios that receive both Sirius and XM, cap prices for three years, offer programming on an "a la carte" basis and make 24 radio channels available for noncommercial and minority programming, among other things.
Tate is also seeking resolution of a pending enforcement action against the companies before casting her vote.
The FCC had distributed licenses to XM and Sirius in 1997 on the condition the two satellite companies never merge.
However, both companies were financially in the doldrums weighed down with heavy operating costs for contracts with such celebrity hosts as Howard Stern, Oprah Winfrey and Martha Stewart.
Seventeen months ago, XM and Sirius announced they would merge citing it as perhaps their only chance of survival in an increasingly competitive marketplace with Internet radio, MP3 music players and terrestrial radio.
The companies claimed that a merger would give them a subscriber base of over 17 million as well as allow the company to begin servicing Puerto Rico, where neither currently operates.
The Justice Department approved the merger in March after a lengthy review, ruling that a monopoly satellite radio provider was unlikely to harm consumers as they had other alternatives.
Nevertheless, several lawmakers, including Sen. Herb Kohl (D-Wis.), chairman of the Judiciary Committee's subcommittee on antitrust and consumer rights, did not approve of the Justice Department's decision and urged the FCC to reject the merger.
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