Sirius XM (SIRI) posted a second-quarter loss that was a penny better than Wall Street’s estimate. The satellite radio company, created last month in the combination of New York-based Sirius and Washington-based XM, posted Sirius’ standalone results for the quarter ended June 30. Sirus lost $84 million, or 6 cents a share, compared with the year-ago loss of $134 million, or 9 cents a share. Revenue rose to $283 million from $226 million a year earlier. Analysts surveyed by Thomson Financial were looking for a 7-cent loss on revenue of $283 million.

“Despite a tough economy and weak auto sales, gross additions set a new second quarter record,” said CEO Mel Karmazin. “In the second quarter both revenue and subscribers grew 25% as compared with last year, while cash costs remained essentially flat leading to a 70% reduction in our second quarter EBITDA loss.”
 
Total subscribers rose to 8.9 million from 7.1 million a year ago, driven by a 53% rise in subscribers using radios pre-installed in their cars and a 7% rise at retail, while subscriber acquisition costs fell 27% from a year ago. But the stock’s plunge to a recent $1.45 a share from nearly $4 last year shows that Karmazin will have to make some big changes if the cash-burning company is going to get back on Wall Street’s good side. The pressure is now on Karmazin to show that this long-awaited merger was a sound idea.

Sirius (SIRI) surged 14% in overseas trading after The Wall Street Journal reported the staff of the Federal Communications Commission is recommending the agency’s board approve the satellite radio broadcaster’s planned acquisition of rival XM Satellite (XMSR). FCC chief Kevin Martin is calling for price caps on the combined company’s service fees and additional service options for three years, the Journal reports. The companies have agreed to the proposed conditions, the FCC says - which isn’t a great surprise considering that Sirius and XM themselves proposed some of them. Fortune’s Scott Moritz wrote last month that, with the Justice Department already having signed off on the combination, the FCC had signaled last month that it expected its own decision by midyear.

But approval by the FCC’s commissioners on these terms is far from a foregone conclusion. The Journal says Martin “may not have the votes for this deal, which could prompt more conditions to be added” - and could keep the clock on this merger, which was announced way back in February of 2007, ticking for some time.

Sirius (SIRI) spiked after the Justice Department cleared the satellite broadcaster’s plan to merge with rival XM Satellite (XMSR). The decision, which came over the opposition of the free-to-air radio companies represented by the National Association of Broadcasters, means the companies now need only to secure approval from the Federal Communications Commission. FCC chief Kevin Martin last week signaled his agency may well be leaning toward a conditional approval as well, when Reuters reported the FCC was working on drafts that included conditions upon which the deal could be approved.

An approval of the Sirius-XM merger would bring an end to more than a year of waiting since the companies proposed the deal back in February 2007. On Monday, Sirius rose 7% and XM surged as much as 16%, as once-skeptical investors flooded back into the shares. Even now, though, Wall Street continues to price the shares as if a deal might not happen: XM shares recently traded at $13.75 apiece, a discount of around 4% to the indicated value of Sirius’ all-stock offer.