July 23 (Bloomberg) -- Sirius Satellite Radio Inc.'s purchase of XM Satellite Radio Holdings Inc. is close to winning approval from the Federal Communications Commission, a person with knowledge of the proposed plan said.

Republican Commissioner Deborah Taylor Tate may cast the deciding vote as soon as today, allowing the companies to complete the deal they announced 17 months ago, said the person. Shares of both companies jumped more than 10 percent.

The FCC is the last regulatory obstacle to the $3.9 billion takeover, and a 2-2 deadlock left the deal in Tate's hands. Two Republican members, Chairman Kevin Martin and Robert McDowell, voted earlier for the merger. Democrats Michael Copps and Jonathan Adelstein voted against, with Adelstein saying today it would create ``a monopoly with window dressing.''

``Commissioner Adelstein would only cast a dissenting vote once it was fairly clear that Commissioner Tate would support the deal,'' Paul Gallant, a former FCC official and Washington- based analyst with Stanford Washington Research Group, said in an interview.

Tate's vote comes in exchange for an agreement that settles enforcement issues involving the companies, said the person, who declined to be identified because the accord isn't final. FCC members vote electronically in private with no deadline.

Negotiations are ``close to complete'' among Tate, Martin and the companies, Stifel Nicolaus analyst Blair Levin, a former FCC chief of staff, said in an e-mailed note.

Opposition

The Wall Street Journal reported Tate's voting plans earlier today and said the tentative agreement includes a $20 million fine for the companies. FCC spokesman Robert Kenny wasn't immediately available to comment.

Traditional radio companies led by the National Association of Broadcasters oppose the merger, saying it will create a harmful monopoly. Sirius and XM, the only two pay-radio companies, told regulators their union would bring consumers more programming at a lower cost.

The companies agreed to freeze prices for three years, to sell channels in smaller packages and to allocate 8 percent of their channels for use by educational and minority broadcasters.

Antitrust authorities at the U.S. Justice Department cleared the all-stock deal in March, saying competition from music sources including MP3 players and traditional radio would keep the combined company from raising prices.

Share Exchange

Sirius, based in New York, gained 30 cents, or 13 percent, to $2.68 at 4 p.m. New York time in Nasdaq Stock Market trading and has declined 12 percent this year. XM, based in Washington, rose 94 cents, or 10 percent, to $10.04 and is down 18 percent.

Moody's Investors Service Inc. said it is reviewing Sirius's Caa1 debt rating for possible downgrade, saying both companies continue to use up cash and that the timing and magnitude of savings from the deal is uncertain. The companies had combined debt of $2.95 billion as of March 31.

Sirius is offering 4.6 of its shares for each of XM's. The companies first proposed the combination in February 2007. It was valued at $4.57 billion at the time. The FCC began its review of the transaction the following month.

Adelstein had sought a six-year price freeze, and for the companies to allocate 25 percent of their spectrum for educational and minority broadcasters. He also wanted requirements that the radios be capable of tuning into both services as well as terrestrial broadcasters' digital channels.

``I was hoping to forge a bipartisan solution that would offer consumers more diversity in programming, better price protection, greater choices among innovative devices and real competition with digital radio,'' Adelstein said in his statement. ``Instead, it appears they're going to get a monopoly with window dressing.''

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

Last Updated: July 23, 2008 19:30 EDT