Sirius CEO Denys XM Merger Rumors

UPDATED Citing officials close to the matter, the New York Post reported Wednesday that talks have resumed between XM Satellite Radio and Sirius over a possible merger. While the talks have not gotten as far as to discuss a price, the paper said officials have discussed anti-trust concerns.

But Sirius CEO Mel Karmazin was quick to squash the rumors. In a company earnings call on Wednesday, Karmazin said, "I have not met with the [XM] chair or the CEO, so I have no idea where this has come from," according to Billboard.

In the wake of Sirius' hiring of former Viacom exec Karmazin, the Post claimed talks have begun anew. "Mel is a roll-up guy, a deal guy," said one source close to Karmazin. A merger would create a monopoly in the young satellite radio business.

Some pundits speculated that a deal with XM could be in response to Wall Street criticism that Sirius "overpaid" Howard Stern, and the company's realization that it would be hard for it to pay Stern the $500 million it agreed upon last year.

Merrill Lynch analyst Laraine Mancini said in a conference call earlier this week that one of the chief risks of investing in the companies' stock is a potential price war and "irrational bidding" for content.

A merger between XM and Sirius would end the problem and allow for the combined entity to spend a lot less on marketing.

Separately, Sirius is not doing as well as planned. The company announced Wednesday a wider quarterly loss and placed its sales numbers below analysts' expected targets, sending the stock tumbling 3.9 percent in early trading.