When the combination of XM Satellite Radio and Sirius Satellite Radio was proposed more than a year ago, it seemed to some to be wishful thinking.

The two are not just the leading satellite-radio providers, they are the only satellite-radio providers.

But Bush administration regulators have rarely seen a merger they didn't like, and the Justice Department said today that a merger was not "likely to substantially lessen competition."

"The evidence did not show that the merger would enable the parties to profitably increase prices to satellite-radio customers for several reasons, including: a lack of competition between the parties in important segments, even without the merger; the competitive alternative services available to consumers; technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers," the Justice Department said.

The Federal Communications Commission must still approve the deal. While the commission may impose a number of conditions, it is not expected to go against the Justice Department and try to block the deal.

While the combined company would have a monopoly in satellite, radio is very fragmented, with internet radio providing competition to conventional broadcasting.

Sirius, known for having Howard Stern on its roster, has 7.7 million subscribers, while XM, whose programming includes Oprah & Friends, has 8.6 million.

The two companies have been bleeding billions of dollars. Shares surged this afternoon on hope that a combined company could become profitable.