Weekend Market Notes 7/27

It's finally happened for Sirius (SIRI) and XM (XMSR)! The FCC has approved their merger to create a single unified Satellite Radio company. The two firms have to pay a $20Million fine for breaking their FCC promise of never merging, but that's small potatoes when you consider how much these two were paying for exclusive rights to various programming.

Those bidding wars can now end, cost cutting and synergy can begin. For Sirius, there will be share dilution but long term holders should stay positive on the company as this big hurdle has been finally climbed. For XM, holders should be looking at some short term gains as the price of Sirius determines the finaly buyout offer for its counterpart.

Amgen (AMGN) made headlines late friday after test results of an osteoporosis drug met its trial goals. The stock shot up 14% on the news after-hours. It'll be interesting to see if the company can extend its climb or will experience a profit-taking pullback as its earnings are also on tap.

In the Entertainment world, The Dark Knight keeps breaking records and playing to sold out showings in traditional cinemas and IMAX (IMAX) screens. After an estimated $75Million grossing weekend, Batman's haul stands at over $314Million domestically, putting it on tap to be a very profittable film for Time Warner (TWX). With a 10 day trek to reach $300Million some analysts are already eyeing the next $300Million, putting the film on pace to near Titanic's record domestic gross.

Disclosure: Author holds no position in the above mentioned companies

Satellite Radio and Apple Inc.

An interesting combination, that probably engineering teams on both sides have thought of. Could the iPod have the ability to let its users listen to Satellite Radio?

Apple (AAPL), XM (XMSR) and Sirius (SIRI) could do decently well for each other by talking about this. The satellite radio companies have each tried to develop and release their own handheld device to overall little fanfare and now with the merger news swaying back and forth almost daily, the main talking points seems to have shifted from growth in the industry to cost savings from synergies. Why not take a look to the poster child of growth and innovation and figure out a way to spark subscription sales?

How many car owners would continue their Satellite Radio subscription after the free 3 month trial if they knew they could get satellite radio streams on their iPods and through iTunes?
Apple and AT&T have just revolutionized the wireless industry consumer sign-up process, so why couldn't they try to do the same thing for satellite radio? Wouldn't it be relatively easy to work out a sign-up process through iTunes so new and existing customers of satellite radio could activate the availability of getting their radio on their next gen iPod/iPhone? The potential new subcriber additions for the Satellite radio companies is huge.

First major question is the engineering involved, could it be done right now? Is there a way for the brilliant engineers of Apple, Sirius and XM to figure out how to put the satellite radio decoding hardware into the same/next generation shapes of the iPod and the iPhone?

Second major question is monetary. Certainly Apple would demand a share of monthly subscription revenues, perhaps an upfront connection fee and total control over the engineering involved with the hybrid devices. Would Sirius or XM agree to those terms? Seems like we're talking iPhone all over again and that's seemed to work out well for AT&T so far (With the official sales word coming next week during Apple's quarterly earnings report).

I can certainly see such an announcement would benefit all the companies involved. With Satellite Radio still being an industry of fluctuating but sustainable growth it seems like spark is needed to reignite the passions of investors in shares of Sirius and XM. The merger talk and cost savings have taken their toll on both companies year-to-date and while there is no guarantee they will be allowed to merge, an idea like this could put both companies subscriber numbers back on the path of blockbuster growth.

Disclosure: Author is long AAPL & SIRI