Sirius XM Radio ( SIRI - Get Report) has significantly narrowed the divide in talks with satellite mogul Charles Ergen over a deal to save the company from a bankruptcy filing, the Wall Street Journal reports.

However, Sirius, the only satellite-radio operator in the U.S., continues to discuss a rival offer from Liberty Media ( LINTA), the Journal reports, citing people familiar with the situation.

The Journal notes the gap between what Ergen has proposed and Sirius has asked for has narrowed, but the parties haven't reached agreement yet on other, nonfinancial issues. Ergen is prepared to let Sirius CEO Mel Karmazin retain his position, the newspaper reports.

Ergen, who controls Dish Network ( DISH - Get Report) and EchoStar ( SATS - Get Report), has offered to inject about $500 million into Sirius and restructure the debt he holds in the company in return for control. The offer is contingent on the successful renegotiation of about $600 million in Sirius bank loans and about $200 million in other debt, the Journal reports.

Under Liberty's plan, the company wouldn't acquire Sirius outright or seek to pair it with DirectTV ( DTV), the satellite-TV provider Liberty controls. Liberty would make an investment that would enable Sirius to meet its credit obligations in return for a large stake, the newspaper reports. Neither offer involves buying out Sirius's equity holders.

This article was written by a staff member of TheStreet.com.