Sirius Satellite Radio (NASDAQ: SIRI) received Justice Department approval yesterday for its $4.59 billion purchase of rival XM Satellite Radio (NASDAQ: XMSR). The controversial decision to give antitrust clearance to the deal was based on rapidly expanding technological options for audio media such as mobile phones and internet radio.

Justice Department antitrust chief Thomas Barnett said in a conference call with reporters that, "Competition in the marketplace generally protects consumers and I have no reason to believe that this won't happen here."

This is obviously good news for investors in both companies, though the deal still requires FCC approval. The Federal Communications Commission may prove an even more difficult audience for Sirius CEO Mel Karmazin who lobbied the Justice Department intensely for the deal. The FCC is seen as more susceptible to the outrage of groups like the National Association of Broadcasters that views this purchase as creating a monopoly.

The FCC currently has a policy based on a 1997 decision that prevents the combination of the two satellite radio companies. At this point, rumors from inside the FCC say that no decision has been made but that the Justice Department conclusion makes it more difficult for the FCC to flatly block it.

Though FCC approval is far from a given, the real question for investors remains - is there real upside in the combination of Sirius and XM? Here's what the Justice Department had to say in their statement allowing the deal:

"Because XM and Sirius would no longer compete with one another in the retail channel following the merger, the Division examined what alternatives, if any, were available to consumers interested in purchasing satellite radio service, and specifically whether the relevant market was limited to the two satellite radio providers, such that their combination would create a monopoly. The parties contended that they compete with a variety of other sources of audio entertainment, including traditional AM/FM radio, HD Radio, MP3 players (e.g., iPods®), and audio offerings delivered through wireless telephones. Those options, used individually or in combination, offer many consumers attributes of satellite radio service that they may find attractive. The parties further contended that these audio entertainment alternatives were sufficient to prevent the merged company from profitably raising prices to consumers in the retail channel – for example, through less discounting of equipment prices, increased subscription prices, or reductions in the quality of equipment or service."

The statement also say there are "substantial" cost savings to be had, but overall tone speaks to the reality that satellite radio seems almost like old media in the face of iPods and streaming, high quality internet radio. Sirius and XM possibly warrant investment with total approval now more likely, but the companies certainly don't warrant unbridled enthusiasm.

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