Shares of XM, Sirius Fall After FCC Casts Doubt on Possible Merger

Authored by Mark Hefflinger on January 17, 2007 - 10:42am.

Washington - Share prices of the nation's two satellite radio firms -- XM and Sirius -- fell sharply on Wednesday, after FCC chairman Kevin Martin said that a potential blockbuster merger between the companies would be prohibited by FCC rules.

In recent weeks, the share prices of both companies had risen sharply on increased speculation about a potential merger.

"There is a prohibition on one entity owning both of these businesses,'' Bloomberg quoted Martin as telling a group of reporters on Wednesday. Immediately after the comments were reported, the two companies' share prices dropped.

Rumors of a possible merger were fueled last month by Sirius CEO Mel Karmazin, who told analysts he sees "significant benefits" from a combination of the two companies, who together have more than 14 million satellite radio subscribers.

The share price of XM ended down 9.8% -- and Sirius' shares down 6.8% -- on Wednesday.