Satellite radio providers XM and Sirius confirmed the rumors Monday, announcing a surprise $13 billion merger of equals, which would keep Sirius CEO Mel Karmazin and XM Chairman Gary Parsons in their respective roles.

XM CEO Hugh Panero will not have a role in the new company, which as of yet has not been named. XM and Sirius expect the merger to be completed by the end of 2007, but the companies have major regulatory hurdles to clear first, including permission from antitrust watchdogs and the FCC.

News of the merger was first reported by the New York Post, which claimed both sides were meeting in Washington, DC to finalize an agreement. Antitrust concerns way heavy on the negotiations, thus lawyers on both sides were working to address.

Between $3 billion and $7 billion could be saved annually with a combined company that would have approximately 12 million subscribers, the companies say. The combination would also merge Sirius' premier content such as Howard Stern and Martha Stewart with XM's, which includes Major League Baseball and Oprah Winfrey.

"We are excited for the many opportunities that an XM and SIRIUS combination will provide consumers," said Parsons and Panero said in a joint statement. "The combined company will be better positioned to compete effectively with the continually expanding array of entertainment alternatives that consumers have embraced since the Federal Communications Commission (FCC) first granted our satellite radio licenses a decade ago."

"Together, our best-in-class management team and programming content will create unprecedented choice for consumers, while creating long-term value for shareholders of both companies," remarked Karmazin. "The combined company will be positioned to capitalize on SIRIUS and XM's complementary distribution and licensing agreements to enhance availability of satellite radios, offer expanded content to subscribers, drive increased advertising revenue and reduce expenses."