In a move that would combine the eclectic flavors of Snoop Dogg, Bob Dylan, and Oprah with that of Howard Stern, Martha Stewart, and Nascar, satellite radio rivals XM and Sirius said yesterday that they have agreed to a $13 billion merger of the companies.

Under the terms of the deal, which has been rumored for several months, Sirius would acquire its fierce competitor, with XM shareholders receiving 4.6 Sirius shares for each XM share held, or a 21.7 percent premium based on the two companies' Friday closing prices.

In a statement, XM and Sirius claimed that the deal would give subscribers more choice and better pricing options.

"This combination is the next logical step in the evolution of audio entertainment," said Sirius CEO Mel Karmazin, who would be become the combined entity's CEO.

But the deal is expected to face tough opposition, as Federal Communications Commission Chairman Kevin Martin said today that the hurdle "would be high as the commission originally prohibited one company from holding the only two satellite radio licenses." Martin said the companies would have "to demonstrate that consumers would clearly be better off with both more choice and affordable prices."

XM and Sirius argue they should be allowed to combine as they compete with every audio device that consumers use--from typical car radios to digital music players. As one company, they said they can offer improved services at flexible prices.

"We are in a very dynamic and robust digital audio market in which we are competing with free AM and FM radio, we're competing with HD radio, we're competing with iPods, we're competing with Internet radio, with cell phones," XM spokesman Nathaniel Brown told the Boston Globe.

The new company would have annual revenue of about $1.5 billion and about 14 million subscribers. Wall Street analysts have predicted that an XM-Sirius merger could save the two companies nearly $7 billion annually.

XM shares jumped more than 12 percent to $15.68 in midday trading on the Nasdaq exchange, while Sirius shares were up more than 8 percent to $4.01.