JJC:    No, there is no relief in sight... I'm not talking about the weather... Another horrible day in the market, the usual suspects... The financials, and what happened to them?... What do you think happened to them?... Taken down and shot, repeatedly... Dead again... You don't need me to tell you... We spent all day talking about it... I got something else I want to talk about... Not everything is wrong out there... After nearly 18 months, the FCC has finally done the right thing and approved the merger of Sirius and XM Satellite radio, allowing me to take down my tally that showed this deal took longer to negotiate than the Louisiana Purchase... So how come it doesn't feel that way?... I mean, how come it doesn't feel like we've won?... Why, if this is such a good thing, to quote Martha Stewart, whose company reports tomorrow, did the stocks of both companies go down?... Why have they been going down endlessly since we pretty much knew that it was in the bag?... Shouldn't the stocks be up on this news?... There's no doubt that the deal made things easier for them... Sirius and XM will no longer be at war with each other... So, their subscriber acquisition costs should go down... Perhaps, severely... What the combined company will have to pay to artists should be down, severely... With 18 million combined subscribers, there should be more people listening to our fave, Cramer-fave, Howard Stern, and Martha Stewart and Oprah... And I bet they won't have to negotiate the same incentives to give the stuff to the auto companies... I don't think there's any question that more people will take a product that has both major league baseball and the NFL, not to mention NASCAR, then they bought a product with just one or the other... The FCC's approval should also take bankruptcy off the table... Now, I think people will take XM for channel 51, thirty straight days of Coldplay, which I had to listen to for 30 hours this weekend as I took my kids around to every errand imaginable... It's still going to be very hard for the combined company to make money... And while there is a way to play the merger, I will not recommend the common stock tonight... Which, I think at this point isn't a whole lot different from some other investments that I've put together... Like this one, let's see, extreme green, 11 and 15... How about this one?... This is another that could be equal to the toss of XM and Sirius... This is the 10x Money... How about this... Here's the Jersey lottery, I've got a very good number here, pick six... No, wait a second... This could be the winner... I think I got one... Anyway... That's right... Sirius is now a $2 lottery ticket... $2 ticket to racetrack... No point at wagering... Why?... The year and a half this companies spend waiting to merge has cost them dearly... In fact, this may end up being a victory for Sirius and XM... And something closer to a win, unbelievably, because of the delay, for the bad boys at Terrestrial Radio, that tried so hard to block the deal and did manage to get it delayed forever... In 2007 Sirius lost $327 million while it was waiting for approval... XM lost $341 million for a combined $668 million in negative earnings before interest, taxes, depreciations... You don't pay a lot of taxes when you're down... Right now, neither company is cash flow positive... Forget profitable... Even though most of the analysts thought Sirius and XM would be breaking even by 2006 or 2007, when I went back and read the research from 2004-2005 period... Plus, with US auto sales down big, and projected to decrease another 14%, through 2010, unless more people sign up, and Sirius getting three quarters of its new subscribers from new car sales, the task of making the combined company profitable in this environment is looking more (difficult) by the day... Here's the problem in a nutshell... Together Sirius and XM should be burdened by an Augean stable of debt... $3 billion dollars worth... The common stock only works if the combined company could become profitable and if the debt gets repaid, something I don't think is likely to happen for at least, well, as far as the eye can see, years... So, right now, you know who's in charge?... You know who is in charge of this merger?... The bond police... They're in charge, as they usually are when you have an unprofitable company with a lot of debt... As long as these two companies together are losing money, and need to stay afloat, the bond holders, and not the holders of the common stock, are generally the ones with all the upside... Even though at the current price we're only paying about $503 per subscriber, and the combined market caps of Sirius and XM are twice what their combined debt load should be, their lack of profitability means they need to keep borrowing... And that puts the bond bullies in charge... There's another factor at work here... XM has a bunch of debt that's automatically has to redeem when the merger is consummated... For example, XM has some $400 million and 1.75% convertible senior notes, due 2009... These are bonds that can be converted into stock, diluting you, and XM gave these holders of these bonds a higher 10% rate of return, in exchange for agreeing not to ask to redeem their bonds when the merger happens... They're trying so hard to keep your common stock plain... Think about these numbers... 1.75% interest and 10%, just to keep the bond holders from coming for their money... XM had to do something similar with its $600 million dollars in 9.5 senior notes... Boy, they can really own this thing if things go awry... They're going to be exchanged for non-portable notes at a much higher rate, 16% in order to get the bond holders to waive the right to redeem the debt when the merger happens... In other words, they are appeasing the bold holders... They are appeasing them... And they have to be at you expense... 10% interest, 16% interest... That's the combined combination of Tony Soprano, Mastercard, maybe Shylock... Look at how the bond bullies are pushing the common cowards around... Clearly, I see the way to play this is to becoming a bond bully, yourself... But what's the best way to go about doing that... If you can't get your hands on XM's 10% convertible senior notes, okay, that mature in 2009, that should be one good way to join the bond, the bond bullies, take your cue from Shylock here... And I know bonds are hard to understand... But I also feel like you're owed an explanation at why your common stock is not going up... Your owed it because I'm sure you're frustrated... And it's because people are taking the cue from Shylock, himself, when he says five times, I have sworn an oath that I will have my bond... The Bard... There's another way to do it too... This is another, again, I know these are difficult concepts, but I feel like people want to play this so badly, I'm telling you how to play it... Today, XM announced a $550 million dollar offering for senior subordinating notes, due in 2014, these are exchangeable into shares of Sirius common stock, which you want, but you're getting killed if you're in it... Even though we don't know what the coupon, that's the interest you'll be paid or the rate of exchange for Sirius stock is yet, and we won't until the offering prices, I think these notes may turn out to be a much better way to play the merger... The expectation right now, according to respected judges, replace IFR, which is part of lawyers, is that the coupon will be between 6% and 6.5%... The conversion premium will be between 20 and 30%... Meaning, the notes will be 20-30% more expensive when they're issued than the amount of Sirius stock they can be swapped for... All right, what's that mean?... Let's speak English, okay?... It means that you get a 6-6.5% yield, just sitting there, waiting for Sirius to go up... And if the common stock increases, by more than what's known as the conversion premium, 20-30%, you can take that note and sell the stock for a profit, you can exchange it... So, in other words, what I'm saying is, I had to give you the actual meat of it because otherwise you'll think well what is he talking about bonds?... But, this is potential upside... You convert the bond into stock, and make money if the common works, but no downside if the common, well, does nothing... And you get a 6-6.5% coupon payment for six years... In other words, once again, that the common stock you see is not what's going to be the play on this combination... It's going to be so watered down, that that's why it's basically underwater now... That's why you're not making any money... It's these bond bullies and I've just described who they are so you can join them that should be, and will be rejoicing at the merger... The FCC, with its endless delays has reduced Sirius' common stock to no more than White Ice 8 or Ten X Money or Green, Green, or Sunny Sevens, how do they get away from stealing this money from people, this lottery thing?... Well, I mean, I guess you could have them all buy Sirius stock... I don't think the combined Sirius/XM will go bankrupt