Sept. 12 (Bloomberg) -- Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. advanced in Nasdaq Stock Market trading after a Cowen & Co. analyst said their proposed merger may get regulatory approval as soon as next month.

``We believe approval as early as October is possible'' from the U.S. Federal Communications Commission. Tom Watts, the Cowen analyst, said today in a note. The federal agency's review period ends on Dec. 4, he said.

Sirius shares gained 11 cents, or 3.3 percent, to $3.42 and XM rose 59 cents, or 4.3 percent, to $14.21 at 4 p.m. New York time. They have dropped 3.4 percent and 1.7 percent this year, respectively.

FCC Chairman Kevin Martin said yesterday the agency plans to vote on the deal in the fourth quarter. He said the FCC is trying to decide on mergers within 180 days. Proceedings began June 8.

Sirius agreed to buy larger rival XM in February in a deal valued at $4.83 billion based on today's prices. Approval chances have increased because of ``positive momentum from supporters and a strong precedent from the Whole Foods merger,'' Watts wrote. A federal judge last month ruled Whole Foods Market Inc.'s plan to buy Wild Oats Markets Inc. doesn't violate antitrust laws.

The Justice Department's antitrust division must also sign off on the XM-Sirius combination.

``Both stocks can outperform the market even without a merger,'' said Watts, who has ``outperform'' ratings on XM and Sirius.

To contact the reporters on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net; Nick Baker in New York at nbaker7@bloomberg.net.

Last Updated: September 12, 2007 16:15 EDT