Washington - Shares of XM Satellite Radio jumped more than 12% on Tuesday, despite fears from many analysts that the company's proposed $13 billion merger with rival Sirius Satellite Radio may not pass regulatory muster.

The deal, which potentially could close by the end of 2007, would create a single satellite radio powerhouse, uniting such radio personalities as Howard Stern, Oprah Winfrey and Martha Stewart onto a single service, while reducing costs for both companies.

The Federal Communications Commission, however, currently has a rule in place prohibiting a single company from owing two satellite radio licenses. Though the rule technically could be changed, some see that as unlikely.

"The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices," said FCC Chairman Kevin Martin, adding "the hurdle here, however, would be high."

The companies plan to argue that their merger is in the public interest due to competition from sources such as Internet radio, the iPod and other audio services.

"I would not have gone to our board... if we didn't think there was greater than a 50-50 chance of approval," Mel Karmazin, the chairman of Sirius, told reporters during a conference call.

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