XM Satellite Radio Holdings Inc. reports third-quarter earnings on Thursday and its rival and proposed acquirer, Sirius Satellite Radio Inc., reports on Tuesday Feb. 26. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The pending combination of XM and Sirius dominated the fourth quarter, as the company’s shares fluctuated on any signs that the $5 billion deal would win regulatory approval or fall through.

Although shareholders approved the merger in November, investor concerns mounted toward the end of 2007 as the Department of Justice and Federal Communication Commission continued to delay a decision. The companies had hoped to receive regulatory clearance by the end of 2007.

Those fears were stoked in mid-December, when Rep. John Conyers, D-Mich., chairman of the House Judiciary Committee, urged the Justice Department not to “rush through” an approval.

Besides merger jitters, the weakening economy weighed on the company during the quarter due to soft consumer spending. Concern also grew about the lagging auto industry. Analysts and company officials believe that sales of new cars with factory-installed radios will drive future satellite radio growth _ rather than retail sales.

BY THE NUMBERS: Analysts surveyed by Thomson Financial expect XM to report fourth-quarter loss of 64 cents per share on revenue of $303.2 million. Analysts predict Sirius will book losses totaling 13 cents per share on revenue of $267.4 million.

ANALYST TAKE: Stifel Nicolaus & Co. analyst Kit Spring said the original equipment manufacturer sales channel may be modestly affected in the fourth quarter by a decline in auto industry sales, although the analyst expressed confidence that penetration levels would continue to rise.

“We concede that a slowing U.S. economy poses a significant risk to this growth but note that the increases in penetration are more than offsetting declines in U.S. auto sales,” Spring wrote in a note to investors.

WHAT’S AHEAD: Investors eyes remain focused on the Justice Department, which is expected to announce a decision on the proposed combination during the first quarter.

Spring expects the deal to “squeak through,” but predicts that approval will come with some conditions.

Cowen & Co. analyst Thomas Watts expects Justice Department approval and a split FCC decision in favor of the deal. “However, we believe both stocks can outperform even without a merger based on free cash flow potential alone,” Watts noted.

Goldman Sachs analyst Mark Wienkes said the Justice Department is “increasingly unlikely” to block the deal, but was less optimistic about long-term performance. “Longer term, merged or unmerged, our outlook for satellite radio is cautious given our view of unrealistic cash flow expectations, and hence valuation risk,” Wienkes said.

STOCK PERFORMANCE: XM and Sirius shares both fluctuated during the fourth-quarter as investor confidence about the pending acquisition deal crested in early December and then dropped. XM shares rose to a 52-week high of $16.44 before losing about 25 percent to close the year at $12.24. Sirius shares rose to $3.94, then fell 23 percent to end the year at $3.03.