May 23 (Bloomberg) -- The U.S. Federal Communications Commission may reach a decision on Sirius Satellite Radio Inc.'s proposed takeover of XM Satellite Radio Holdings Inc. by the end of June, Chairman Kevin Martin said.

``The commission could act by the end of the second quarter,'' Martin told reporters at a press conference in Washington today. The combination of the two U.S. pay-radio companies wasn't placed on the agenda for the commission's regular monthly meeting on June 12.

The value of the all-stock deal has declined to $3.8 billion, based on today's closing stock prices, from almost $4.6 billion in February 2007, when New York-based Sirius said agreed to buy its larger Washington-based rival.

Commissioners are privately debating what conditions to demand in exchange for approving the transaction. Some U.S. lawmakers and interest groups are asking that the combined entity allocate part of its spectrum to competitors including minority-owned broadcasters, and that it be required to let any manufacturer make receivers to boost consumer choice.

Martin declined to discuss details of the commission's deliberations.

The FCC isn't required to vote by a specific date, and may delay the matter beyond June if commissioners can't reach a decision. The U.S. Justice Department approved the combination on March 24, saying competition from broadcast radio and digital-music players would prevent price increases.

The shares pared their losses after Martin's remarks. Sirius fell 4 cents to $2.59 at 4 p.m. New York time in Nasdaq Stock Market trading after dropping as low as $2.55. It has declined 15 percent this year.

XM fell 2 cents to $11.02, after declining to $10.75, and had dropped 10 percent this year. Sirius is offering 4.6 of its shares for each of XM, or $11.91 a share based on today's prices.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

Last Updated: May 23, 2008 16:26 EDT