updated 2/28/2005 5:42:10 PM ET 2005-02-28T22:42:10

XM Satellite Radio Holdings Inc. announced a price increase Monday that puts the price of its basic service package in line with its smaller competitor, Sirius Satellite Radio Inc. The news sent the stocks of both companies sharply higher.

XM said it would raise the price of its basic service to $12.95 per month from $9.99 beginning April 2, matching Sirius' monthly fee. After the price increase, XM's basic service will also include a premium talk channel with the shock jocks Opie & Anthony, which had previously cost $1.99 extra per month.

Investors have been intrigued by the satellite radio companies but concerned that it would take a long time for them to recoup the millions they are spending on building up their programming portfolios. Among the largest deals so far are a $500 million deal Sirius signed to get Howard Stern's show, and a $650 million deal XM did with Major League Baseball. The price increase seemed to reassure investors that there was room to increase future revenues.

XM's stock rose $3.98, or 14 percent, to $32.71 on the Nasdaq Stock Market in afternoon trading Monday, while Sirius' shares advanced 44 cents, or 8.5 percent, to $5.59, also on the Nasdaq. Both stocks are roughly in the middle of their 52-week ranges.

The Washington, D.C.-based XM ended 2004 with more than 3.2 million subscribers, while Sirius had 1.1 million. Sirius, which is based in New York, is being run by Mel Karmazin, a longtime radio executive who left the No. 2 job at the media conglomerate Viacom Inc. last year following a power struggle.

Sirius spokesman Patrick Reilly declined to comment on the company's future pricing plans. Sirius does not separate certain channels for extra fees, but XM offers a Playboy-themed radio channel for $2.99 extra per month.

Both companies have been working with automakers to pre-install their devices in new cars and rental vehicles as a way to sign up new customers. Unlike terrestrial radio, satellite services offer many channels of commercial-free music and talk, and can be heard anywhere in the country.

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