Agreement reached for FCC to clear XM-Sirius deal

By Peter Kaplan

WASHINGTON (Reuters) - U.S. regulators reached an agreement to conditionally approve Sirius Satellite Radio Inc's (SIRI.O: Quote, Profile, Research, Stock Buzz) purchase of XM Satellite Radio Holdings Inc XMSR.O as the companies said they would pay millions of dollars to settle allegations of past rule violations.

The three Republicans on the five-member Federal Communications Commission have agreed in principle to vote in favor of letting the deal proceed as long as the companies agree to conditions to protect consumers and settle the FCC enforcement matters, a source familiar with the agency review said on Thursday.

"I think it's fair to say an agreement in principle has been reached," FCC Chairman Kevin Martin was quoted by the Wall Street Journal as saying.

The agreement would allow XM and Sirius to clear the final hurdle in a regulatory marathon that began after the merger was first announced in February 2007. Antitrust authorities at the U.S. Justice Department gave their approval in March.

A major obstacle was removed earlier on Thursday when XM and Sirius said they expected to pay a total of about $19 million to settle FCC compliance issues involving certain radios that include FM transmitters and terrestrial repeater stations.

Martin told Reuters progress toward resolution of the alleged violations was a major step toward getting the deal approved.

"I'm optimistic and hopeful that we will be able to move forward very quickly," Martin told Reuters.

Analysts at Stifel Nicolaus said in a research note that the negotiating and drafting of the agreement were "ongoing." They said FCC approval could be wrapped up later on Thursday or "more likely Friday, but in any event, a matter of days."