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When Sirius Satellite Radio ( SIRI ) persuaded Howard Stern to leave traditional radio for satellite a few years ago, the shock jock took a few potshots on his way out the door. He railed against the "censorship" on terrestrial radio, and he vowed never to return. He called Sirius "the future of radio."

You have to wonder what Mel Karazmin has up his sleeve next now that he has managed to pull off the merger of the decade. Now of course comes the enormous task of convincing Wall Street that satellite radio is a profitable enough business to keep the naked shorting wolves at bay. Although it is encouraging that short interest in SIRIXM (SIRI) (I PRONOUNCE THEE SERICKSUM) has been cut in half recently, it doesn't exactly fill me with warm fuzzy thoughts either. After all, shorting is what has pounded this stock into dust in the last 30 days.

The first time I bought Sirius (SIRI) stock was back in 2003. I averaged my purchases out at 1.31 per share. I sold when it hit 9.00 because as a realist, I understood then that the gains were not sustainable. I would never have thought I would live to see the stock retreat to such an attractive level again in my lifetime.

Sirius XM's (SIRI) share price has now dropped to such a ridiculously oversold level. It doesn't reflect the average analyst opinion and price target. On Friday, Merrill Lynch reiterated a Buy to its private wealth clients.

Merrill notes:

I have just stumbled across your website and hope to be a valuable contributor and analyst.

Of course, the SIRI-XM merger announced as likely approved today (7/23/08) creates a spike in the share price.  This merger will allow teh merged entity an economy of scale operation that is necessary as it competes with its 21st century challenges from Internet Radio, Terrestrial Radio, Podcasts and the like.

Many call this a monopoly.  There is nothing further from the truth.

I am a small-fry, but I feel good about this one.

Shares of Sirius (SIRI) and XM Satellite Radio (XMSR)have fallen over 30% since the reiteration of sell ratings and lowering of price targets for both companies by Goldman Sachs last week. 

With the sell off, the combined market capitalization of the companies now stands at just over $5.1B, levels not seen since Q4 of 2003.

Given the current share price of around $2.50, and with the current merger prospects, Sirius (SIRI) is now a must-own simply because it's well below its fair value of $4 a share by the average analyst.

Mad Money's Jim Cramer sees SIRI seeing $6 a share when the merger is complete.

Filed under: Deals, Google (GOOG), Yahoo! (YHOO), XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), Market matters, CBS Corp 'B' (CBS), Clear Channel Commun (CCU), Stocks to Buy, Cramer on BloggingStocks

The Sirius (SIRI) /XM Satellite Radio (XMSR) merger has been under DOJ and now under FCC review for longer than the Iran hostage crisis. <!---->Jim Cramer has commented that the deal may not happen. How should the stockholders expect the two stocks to react, in terms of stock price, if the deal falls through because the FCC requires onerous conditions for the merger which cannot be accepted?