Sirius, XM radio eager for ruling on merger plans

NEW YORK -- They have to worry whether the softening economy will hurt new car sales — the largest generator of new satellite radio subscribers.

Also up in the air is how many holiday shoppers put portable satellite radios on their gift lists.

Several analysts were disappointed by non-car radio sales for Sirius and XM in the third quarter. That led Goldman Sachs analyst Mark Wienkes to write that "The retail satellite radio market is on life support."

But more than anything, the companies are anxiously waiting to see whether federal officials will OK Sirius' agreement last February to offer stock currently worth about $5 billion for XM.

The Justice Department could say any day whether it will challenge the deal on antitrust grounds.

The Federal Communications Commission is expected to follow with a vote on whether it's in the public interest to let Sirius take control of XM's licenses to use the public airwaves.

Sirius and XM say they expect federal approvals in time for their deal, billed as a merger of equals, to close by year's end. Analysts aren't so sure.

"We're close to the ninth inning, and there's a lot in play," says Stifel Nicolaus managing director Blair Levin. "It really could go either way."

Research firm The Stanford Group says there's a 60% chance the deal will fly. By contrast, Goldman Sachs puts the odds at just 30%.

Investors appear to be cautiously optimistic.

"There's some merger speculation built into both stocks," says James Goss at Barrington Research Associates. "If there was definitely not going to be a merger, either of them would be vulnerable."

The merger announcement came as a relief to investors growing impatient with continuing losses at both companies, exacerbated by extravagant deals to sign up popular programming.

Credit Suisse estimates Sirius will lose $593 million on revenue of $930 million in 2007, while XM will lose $617 million on revenue of $1.1 billion.