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Monday, June 16, 2008

Bloomberg.com: Worldwide

June 16 (Bloomberg) -- U.S. Federal Communications Commission Chairman Kevin Martin is recommending his agency approve Sirius Satellite Radio Inc.'s purchase of XM Satellite Radio Holdings Inc. The shares of both companies rose.

The only two U.S. pay-radio companies committed to not raise rates and will sell smaller packages of channels at lower prices, Martin said in a statement. They'll also set aside some channels for noncommercial and minority programmers, he said.

``On balance, this transaction would be in the public interest,'' Martin said.

Martin hasn't received assurances his proposal will gain the needed majority vote from the five-member commission, said two FCC officials who declined to be identified. The agency poses the final regulatory hurdle for the all-stock deal, valued at $3.73 billion based on June 13 closing prices.

Sirius and XM executives told the FCC they wouldn't raise prices for 36 months if the combination is approved, the agency officials said. Other promises include allowing any manufacturer to make radios, letting consumers purchase individual channels, and committing 12 channels to noncommercial use and 12 channels for competing, minority broadcasters, the officials said.

XM spokesman Chance Patterson had no comment. Sirius spokesman Patrick Reilly didn't immediately return a phone call.

Sirius, based in New York, rose 15 cents, or 5.9 percent, to $2.69 at 11:55 a.m. New York time in Nasdaq Stock Market trading, after gaining as much as 8.3 percent to $2.75. XM, based in Washington, advanced 71 cents, or 6.5 percent, to $11.58.

FCC Decision

Martin may formally forward his recommendation to the other four commissioners as early as this week, the officials said. That would commence a period of negotiations that typically lasts at least three weeks. The agency, which has been reviewing the deal since March 2007, isn't under a deadline to act.

Under the proposed conditions, the combined company would set aside 8 percent of its airwaves for competing channels, the officials said. U.S. Representative Bobby Rush, an Illinois Democrat, and other lawmakers have been pushing for XM and Sirius to give up a larger percentage.

The U.S. Department of Justice's antitrust authorities cleared the deal in March, saying the companies couldn't raise prices profitably because consumers have other choices for music such as MP3 players and traditional broadcast radio.

Opponents, including traditional broadcasters, say the combination will replace competitors with a monopoly.

XM, with 9.3 million subscribers and 170 channels, and Sirius, with 8.6 million customers and 130 channels, offer basic subscriptions for $12.95 monthly. Sales growth comes mainly from being included as part of the equipment in new automobiles.

Sirius will offer service in Puerto Rico after the merger, where neither company has customers now, the officials said.

Under the proposed takeover, investors would get 4.6 shares of Sirius for each XM share owned.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

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