Street Waits for FCC Decision on Sat Radio Combination

Now that the satellite radio competitors have the blessing of antitrust staff at the Justice Department for their merger, it could be smooth sailing for XM and Sirius to receive that final regulatory OK from the Federal Communications Commission.

Most on Wall Street said they believe it's unlikely the FCC will contradict the Justice Department's approval of the XM/Sirius merger, though they added the communications regulator could impose conditions on the deal. The final government hurdle for the companies to complete their combination is a green light from the FCC.

Last week, FCC Chairman Kevin Martin said a decision on the merger would not be handed down before the close of the month. Alden Mahabir of Utendahl Capital Partners said he expects the FCC to render its decision on the merger within the next couple of weeks.

"Given the track record of the FCC, we are hard pressed to believe it will block the merger after it received approval by the DOJ," Mahabir said in a note. "That said, it is possible that the FCC could impose conditions on the combined entity, such as a-la-carte pricing - already proposed by the companies, price freezes, and/or giving up some of its spectrum."

Given that the Justice Department sees little reduction in competition from a merger, "we think it is unlikely any condition put forth by the FCC will be materially adverse to the companies," Mahabir said.

Utendahl upgraded its rating on XM shares to "over-weight," and maintained its "over-weight" outlook on Sirius shares. Also, Stifel Nicolaus upgraded its rating XM stock from "hold" to "buy," while Janco Partners downgraded XM from "buy" to "accumulate."