Can XM Sue Clear Channel?

We're now 17 months into the courtship between XM Satellite Radio (Nasdaq: XMSR) and Sirius Satellite Radio (Nasdaq: SIRI), but it's hard to tell whether the church bells signal a wedding or a funeral.

The Federal Communications Commission appears ready to approve the deal this month, with a few stipulations -- but is it too late?

Goldman Sachs analyst Mark Wienkes certainly seems to think so, dramatically lowering his price target for both companies last month, despite the deal's likely completion later this year.

"The process appears to be broken," former FCC media bureau chief Ken Ferree is quoted as saying by Associated Press reporter -- and former Fool -- Chris Rugaber over the weekend. Ferree suggests that the commission's goal to nix or approve deals within 180 days has become meaningless.

I'll say. The proposed pairing is about to hit the 500-day mark later this month.

This is certainly a unique and controversial deal, and hardly one to be rushed, but XM and Sirius agreed to many of the concessions last summer. Two hundred days should have been plenty. Three hundred would have been a travesty. But five hundred days? It would be laughable -- if it didn't feel downright criminal.

Unfortunately, the deal's delay has left satellite radio, particularly XM, in bad shape. XM has had to tap new credit lines in recent months. Losses are mounting, even as the two former competitors miss out on merger synergies.

Someone will have to dust this crime scene for fingerprints if XM and/or Sirius falter before they get a chance to seal the nuptials. XM and Sirius investors won't get anywhere by pursuing the slow-footed FCC, but there may have a shot at remuneration by targeting terrestrial radio.

After all, the National Association of Broadcasters is still lobbying against the deal. The group, which represents traditional radio broadcasters like Clear Channel (NYSE: CCU), Citadel (NYSE: CDL), and CBS (NYSE: CBS), seems to be the lone organizational holdout in accepting the merger as fair. If those lobbying efforts have delayed regulatory decisions by creating frivolous hoops of flame for XM and Sirius to jump through, shouldn't a giant like Clear Channel be financially liable for the substantial synergies currently being denied Sirius-XM?

Legally speaking? Probably not. But wouldn't it be a hoot to see satellite radio make terrestrial radio sweat for a change? If nothing else, it would help break down the fading notion that satellite and terrestrial radio aren't competitors.

What do you think? Chime in using the comment box below.

Copyright © 2008 Universal Press Syndicate.