UPDATE 3-US FCC chief near deal for XM-Sirius approval

(Recasts first paragraph, adds analyst comment, closing stock prices)

By Peter Kaplan

WASHINGTON, July 23 (Reuters) - The merger of the two U.S. satellite radio companies was poised for approval as a pivotal member of the Federal Communications Commission neared agreement to cast a tie-breaking vote in favor of the deal, a source familiar with the merger review said on Wednesday.

FCC Chairman Kevin Martin was close to getting the support of fellow Republican commissioner Deborah Taylor Tate to reach the three votes needed to approve Sirius Satellite Radio Inc's (SIRI.O) purchase of XM Satellite Radio Holdings Inc XMSR.O, the source said.

Tate's support would break a 2-2 deadlock on the five-member commission and split the vote down party lines.

A vote on the deal, worth $3.9 billion at Wednesday's closing stock prices, could come as early as this week, another source familiar with the merger review said.

As part of the approval, the FCC will require the companies to pay a $20 million fine for alleged past violations of FCC rules, this source said.

Democratic FCC Commissioner Jonathan Adelstein cast his vote against the deal on Wednesday morning after he and Martin could not come to terms on additional conditions Adelstein wanted to impose.

FCC approval is the last obstacle in a regulatory marathon for the merger that was first announced in February 2007. Antitrust authorities at the U.S. Justice Department gave their approval in March.

The merger would bring entertainers such as Oprah Winfrey and shock jock Howard Stern under the same banner. It has been criticized as anti-competitive by the traditional radio industry, and by some U.S. lawmakers.

XM shares finished up 10.3 percent to $10.04 at the close of regular trading Wednesday on Nasdaq. Sirius shares ended up 12.6 percent at $2.68.

Martin has proposed the commission approve the deal so long as the companies make available to consumers radios that receive both Sirius and XM, they cap prices for three years, offer programming on an "a la carte" basis, and make 24 radio channels available for noncommercial and minority programming, among other things.

Tate has been hesitant to support Martin's plan and has sought further conditions.

Specifics of the talks between Martin and Tate were unclear. But Tate's concerns have centered on allegations that the satellite radio companies violated some FCC rules in the past, and that they fail to pay enough in royalties to musicians, sources have said.

The FCC rule violations, to be resolved with the $20 million fine, stem from allegations that XM and Sirius exceeded allowable strength of some of their ground-based transmitters and failed to follow through on a pledge to make interoperable radios available to customers.

Tate was not available to comment, and a spokesman for Martin declined to comment. A spokesman for XM also declined comment, while representatives of Sirius were not immediately available.