As part of the deal, Sirius buy its US rival XM for $4.6bn in stock creating an $11.4bn combined company.
The move will create the largest satellite radio network in the US, at a time when the growth of the two companies is slowing.
The deal is being proposed in an attempt to bring a wealth of talent under one roof, including 'Sex and the City' author Candace Bushnell, singer Bob Dylan, Major League Baseball and motivational guru Deepak Chopra, whose programmes are split between the services.
Under the new merged entity, the company would most likely allow subscribers to cherry-pick the shows they prefer and pay a related monthly fee, much like cable TV.
However, the merger is set to face tough scrutiny from the regulator the FCC, which will want to ensure consumer prices do not increase as a result of less competition.
Mel Karmazin, the Sirius chief executive, and Gary Parsons, XM chairman, will continue in their current roles as CEO and chairman of the combined company.
Parsons said: "We are confident we will get this through the regulatory arena by the end of this year. Over a decade ago when the first satellite licenses first came out, there were no iPods, there was no HD radio, there were no streaming music on cell phones."
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