BREAKING
According to theflyonthewall:

09:59 EDT XMSR theflyonthewall.com: XM Satellite Radio-XMSR trading higher on take-over speculation-Rumor :theflyonthewall.com

09:57 XMSR XM Satellite: rumor of CBS for XMSR; price talk said to be $27 (21.92 +0.12)

More on this as news develops.
Note: this should be considered a rumor until we find out more.

UPDATE: This from Briefing.com: 

Hearing CBS-for-XMSR chatter making rounds

UPDATE 2: More from Briefing.com:

by: ubscibc

BRF 10:33 XMSR: XM Satellite: Color on takeover chatter [UPDATE]

[Live In Play]

XMSR: XM Satellite: Color on takeover chatter (22.20 +0.40)
[Update]
Following takeover rumors in XMSR today (with CBS cited as a potential buyer... see 9:58 comment), we listened to yesterday's CBS conference call for any possible insight. During the call, CBS was asked directly about Univision (UVN), and their response was "I think Univision is a great company but there are two major issues for us. One is valuation and the other is regulation... other than that it is a wonderful asset." Co stated that they did not think they could clear the first hurdle... Approx 5 minutes later co was asked what they would do with their free cash. Co stated that they want to pay dividend; thinks that it is a higher threshold of confidence and best use of cash; says they would like to keep increasing the dividend. Co also stated that they are not interested in a large acquisition -- say in the $12-13 bln range -- but could be interested in a smaller acquisition in the $300 mln range (i.e. College Sports TV) that would be fairly valued and would fill a void for the co. Says acquisition has to be attractive and be able to grow... Briefing.com
Note: Given yesterday's comments by CBS, with a market cap of approx $5 bln it would not appear that XMSR would fall into the acquisition profile that CBS is interested in.

Briefing.com, Inc.

UPDATE 3: Gary Parsons at the BofA MET Conference stated that he "certainly" wouldn't comment on this rumor.

Eddy W. Hartenstein, former chairman and CEO of DIRECTV, has joined the XM Satellite Radio's board Audit Committee. Hartenstein was elected to XM's board in May 2005

Hartenstein's appointment enables XM to meet Marketplace Rule 4350(d)(2) of the Nasdaq Stock Market, Inc., which requires an issuer's audit committee to be composed of at least three independent directors.

XM had fewer than three independent directors on its audit committee for four days, and Nasdaq rules would have allowed XM until its next annual meeting (anticipated for May) to meet the three independent director minimum.

[Press Release]