That letter yesterday? Just a little Congressional chest-thumping. No reason to doubt the Justice Department is about to sail the merger of Sirius Satellite Radio and XM Satellite Radio, and send it to the FCC. On Wednesday, investors stormed out of both stocks (both down more than 10% in an hour) after Rep. John Conyers (D-Mich) and Rep. Steve Cabot (D-Ohio) made public a letter to Attorney General Michael B. Mukasey saying they were “dismayed to learn” of DOJ’s imminent sign-off.
But shares rebounded in premarket trading today after Stifel, Nicolaus & Co. analyst and former FCC staffer Blair Levin reminded everyone that while as chairman of the antitrust task force, Conyers can hold hearings, but he has no direct say over whether the DOJ approves the merger or not. “It’s possible the Department of Justice will still try to block the deal and that there’s been some sort of leak, but we don’t believe the reported letter … means there is a greater chance of DOJ opposition,” Levin said in a client note, noting a decision could come “any day.” Levin kept his “hold” on XM (XMSR) and “buy” rating on Sirius (SIRI).
We still think the merger passes, crushing the short-sellers who are gambling that Sirius crashes and burns.