The next hurdle in XM's merger with Sirius Satellite Radio: Approval from the FCC, which could finally come in the next few weeks. But analysts remind us today that jamming two rival, money-burning radio systems into one company will be ugly stuff. Why?

• "It will literally take years" for the companies to realize synergies from combining their networks and renegotiating programming and marketing agreements, RBC Capital Markets analyst David Bank says in a note today. Remember, the two systems use different networks, supported by different satellites, and different hardware. They can cut back on ad spending, though.
  
  
• The companies will probably need to operate two separate networks for 2 years after the deal closes, Bank says.
  
  
• The FCC could put conditions on the deal, including possible pricing caps and a-la-carte packaging requirements "above and beyond" what the companies have proposed, Bank says.
  
  
• As penetration goes up, costs will go up, like revenue sharing and royalty agreements with car manufacturers, Goldman's Mark Wienkes says.
  
  
• Lowered cash flow outlook, declining forward estimates, and a tricky debt market could create "possible near-term liquidity hurdles," Wienkes says, especially if they have to refinance more than $1 billion of XM's (XMSR) puttable debt or raise working capital.
  

See Also:
XM / Sirius Last Straw: Time To Fire The FCC
FCC: We're Ready To Rule On XM-Sirius - Someday
The Sirius-XM Hangover: Endless, Growing Competition