Sirius Satellite Radio (NDAQ: SIRI) and XM Satellite Radio Holdings (NDAQ: XMSR) drew one step closer to consummating their planned merger yesterday after a key U.S. regulator expressed support for the 16-month-and-coming deal. FCC Chairman Kevin Martin confirmed published reports that he would support the transaction provided that the companies agreed to a series of conditions.

There had been concern that the merger between the two satellite radio giants would eliminate the possibility of any competition and create a monopoly. As a result, the companies are being forced to agree to a series of conditions including making 24 radio channels available for noncommercial and minority programming. In addition, the companies have to cap prices, provide interoperable radios and offer programming on an a la carte basis.

Martin's decision will likely remove the last remaining regulatory hurdle in one of the most length and heavily criticized decisions in the history of M&A. The Justice Department has already stated that competition from traditional and high-definition radio, iPods and MP3 players already presented a clear competitive environment. As a result, the merger no longer faces any antitrust hurdles.

Shares of both companies rose on the news.

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