Upbeat or Upside Surprise?

In the “no surprise to anybody” category, Sirius Satellite Radio yesterday announced it will have added more than one million net new subscribers in the fourth quarter of 2005.

The recent new-subscriber momentum at Sirius is, as we have discussed here, is a result of the “Howard Effect”: the legions of primarily young, primarily white, primarily male listeners now signing up to receive Howard Stern’s radio program when it begins digitally beaming from space on January 9th.

Most analysts expect similar upbeat news from XM Satellite—the Hertz to Sirius’ Avis—shortly, even given the fact that the “Howard Effect” has provided Sirius with a meaningful advantage in the near term. (The historic 3:1 XM-to-Sirius sales ratio at retail locations which I monitor has been reversed in favor of Sirius in recent months.)

But I wonder how “upbeat”—to use one of Wall Street’s Finest’s most hackneyed expressions—XM will really be when they report their Q4 subs.

My rhetorical question is based less on in-store observation of shoppers picking one versus the other and more on an XM email that recently bombarded friends who had purchased a car with the XM radio or just a plain old XM radio, but had not activated it: If you received or purchased another XM Radio during the holiday season and haven’t yet activated the radio with service, what are you waiting for? Activate your new XM Radio online by December 31, 2005 and we’ll waive all activation fees (up to a $14.99 value.) Get started with XM today by activating online. Happy holidays from your friends at XM, and happy listening! Translation: “We want to hit our subscriber numbers really, really badly.”

Now, perhaps I am over-thinking this one. Perhaps XM has its new sub growth in the bag, and the activation-free incentive is merely a way of ensuring what, to Wall Street’s Finest, is even better news than being merely “upbeat.”

Which is to say, “an upside surprise.”

Any first-hand observations of the efforts by Sirius and XM in the market place are welcome.

Jeff Matthews I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.