XM, Sirius Shares Rise as FCC Head Backs Merger
The head of the U.S. Federal Communications Commission said he will propose that the agency conditionally approves Sirius Satellite Radio's purchase of rival XM Satellite Radio Holdings.
FCC Chairman Kevin Martin said in a statement he would support the proposed merger since XM and Sirius had agreed to a list of conditions, including not raising prices or stifiling competition among radio makers, the Washington Post reported.
His decision could remove the last regulatory hurdle in a lengthy and heavily criticized move to combine the companies, the paper said.
According to FCC sources, the proposal could come as early as this week, and the companies have agreed to make 24 radio channels available for noncommercial and minority programs.
Approval of the deal would require the support of at least two of the agency's other four commissioners. Under U.S. law, the FCC must determine whether a communications deal is in the overall public interest.
Shares of Sirius climbed 14 percent to $2.90 in pre-open trade, after closing at $2.54 Friday on Nasdaq. Sirius shares closed at $3.69 on February 16, 2007, the last trading day before the the deal was announced.
XM shares rose 5.7 percent to $11.49 in pre-open trading, up from Friday's Nasdaq close of $10.87.
In the case of the XM-Sirius deal, the agency also has to decide whether to waive a rule that has barred the two satellite radio companies from merging.
Interest in pay-radio has cooled in the 16 months since their deal was announced, as both XM and Sirius have muted their marketing push while lobbying regulators to approve the deal.
Antitrust authorities at the U.S. Department of Justice approved the merger in March after concluding it would not harm consumers. The department said satellite radio companies face stiff competition from traditional radio, high-definition radio, iPods and MP3 players and audio on mobile phones.