NEW YORK (Reuters) - Sirius Satellite Radio's acquisition of rival XM Satellite Radio Holdings Inc appeared on Monday to draw closer to consummation -- after some 16 months -- driving the shares of Sirius up 14 percent.


Federal Communications Commission Chairman Kevin Martin has backed the deal, and the FCC staff has proposed that the agency approve the merger, according to published reports. The deal would be subject to conditions, many of which had been previously suggested by the companies.

Martin's decision could remove the last regulatory hurdle in a lengthy and heavily criticized move to combine the companies, the Washington Post said.

Shares of Sirius climbed to $2.90 in pre-open trade on Monday, after closing at $2.54 on Friday on Nasdaq. Sirius shares closed at $3.69 on February 16, 2007, the last trading day before 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.

Aides to Martin said the FCC chief decided to give his support after the companies agreed last week to concessions intended to prevent the merged company from raising prices or stifling competition among radio makers, the paper reported.

Martin is expected, as early this week, to issue an order that the FCC vote on approving the union of Washington-based XM and New York-based Sirius, his aides were cited as saying.

Under U.S. law, the FCC must determine whether a communications deal is in the overall public interest.

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.

(Reporting by Franklin Paul, editing by Gerald E. McCormick)

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