XM/Sirius agree to merger

Sirius Satellite Radio Inc. agreed to buy larger rival XM Satellite Radio Holdings Inc. for $4.57 billion in stock to combine the only pay radio companies and stem billions of dollars in losses.

Mel Karmazin, chief executive officer of New York-based Sirius, will be CEO of the combined company, and Gary Parsons, chairman of Washington-based XM, will continue as chairman, the companies said today in a statement.

Sirius and XM faced pressure to merge after losing a combined $7 billion to attract subscribers over the past eight years and signing talent including Howard Stern and Oprah Winfrey. The merger will face antitrust scrutiny and must also be approved by the U.S. Federal Communications Commission.

Under the terms of the accord, which the companies describe as a merger of equals, XM investors will receive 4.6 shares of Sirius common stock for each share they own. Shareholders of each will own about 50 percent of the combined radio company.

The new company's board will consist of 12 members, including Karmazin, 63, and Parsons, 56, four independent members named by each company, and one representative from each of General Motors Corp. and American Honda. Hugh Panero, 50, CEO of XM, will continue in his role until deal closes, which both companies expect this year.

Sirius and XM will operate independently until the deal is completed, the companies said. The name of the combined company and the location of its headquarters will be decided later.