New York-based Sirius Satellite, subscription-based satellite radio firm, has received the go-ahead from the US regulators to purchase rival D.C.-based XM Satellite Radio for $5bn (£2.5bn).

The Justice Department said in a statement that fears over the fact that the merger would hurt competition or customers were unfounded.

"Competition in the marketplace generally protects consumers and I have no reason to believe that this won't happen here," said Thomas Barnett, the Justice Department's antitrust chief.

Several customer groups had lobbied against the merger which would bring shows hosted by Oprah Winfrey, Martha Stewart and Bob Dylan under the same roof. The National Association of Broadcasters, said the move would create a monopoly.

However, they were answered that the deal wouldn’t hurt customers. In fact, the merger would lead to a broader network of channels giving customers more choices.

In its statement, the Justice Department also underlined the fact that, by merging, the two firms will save costs that normally are passed onto consumers.

However, when it comes to competition, the satellite radio firms are facing enough competition as it is coming from their traditional AM/FM radio, internet-based radio stations and programming delivered by MP3 players such as iPods.

The Federal Communications Commission still needs to give its approval for the deal to go ahead.

Shareholders of both satellite radio firms overwhelmingly backed the merger and approved it in November.

Both companies are currently losing money. By merging, XM Satellite, with its nearly 8.6 million subscribers and Sirius, with its 7.7 million subscribers, might be able to cut costs and streamlining operations, thus helping them to turn to profit.

Sirius shares climbed 15 cents, or 4.8 percent, to $3.30, while XM saw its shares rise 52 cents, or 3.8 percent, to $14.31.