In the meantime, they said, assuming the deal goes through, the companies would make other arrangements to bring programming that's currently exclusive to one provider to listeners of the other, such as getting Major League Baseball games -- currently only available on XM -- to Sirius listeners.
The companies billed the deal as a merger of equals, with shareholders of both companies owning approximately 50% of the combined company. However, Karmazin will run the combined company and XM's CEO Hugh Panero will stay on only until the deal is closed. XM Chairman Gary Parsons will remain in that role.
XM shareholders will receive 4.6 shares of Sirius stock for every share they own, valuing the company at $4.57 billion or $17.02 a share based on Friday's closing price for Sirius shares.
That gives XM shareholders a premium of 22% to the $13.98 closing value of their stock on Friday. Markets were closed Monday for the Presidents' Day holiday.
Regulatory Approval Needed
A combination would also have to meet antitrust approval from the Department of Justice. The companies are expected to argue that they compete not only with each other but also with traditional radio and a growing base of digital audio sources such as iPods, mobile phones and non-satellite digital radio.
It's too early to say what the deal might mean for subscription prices. The merger could bring down the cost of providing service, but at the same time give the company more pricing power as the only U.S. satellite radio provider.
Neither XM nor Sirius have reported a profit yet. Both stocks declined more than 40% last year on concerns about their continued growth in subscribers, but investors have held out hope of a merger.
The combined company would have had about $1.5 billion in revenues in 2006 and about 14 million subscribers, they said. The companies said they would work together to decide on a new name and also to determine where it would be based. XM is based in Washington, while Sirius is based in New York.
The new company's board will have 12 members, including Parsons, Karmazin, four independent directors named by each company, and one representative each from General Motors and Honda Motor.
News of a possible merger was reported earlier Monday by the New York Post.
On Friday, a Bear Stearns analyst said in a research note that a merger would have a good chance of overcoming regulatory obstacles. Other analysts remain less sure. Sanford C. Bernstein analyst Craig Moffett said he gives the deal a '50-50' chance of passing regulatory muster.
Moffett said the deal could have a particularly tough time getting through the FCC, and said it was "anyone's guess" as to whether the FCC would change its rule barring a consolidation of the two satellite radio companies.
A group representing radio companies, the National Association of Broadcasters, put out a statement Monday urging federal regulators to block the satellite radio deal.