I know that some readers of this particular entry are not tech savvy and I realize that. So before I even think about mentioning these two companies, it’s only fair that I tell you a little about what satellite radio is, then I’ll get into which one is a better investment as far as their stocks are concerned. In a nutshell, satellite radio is clear almost CD quality radio stations broadcasted from satellite on what is known as an “S” band, unlike traditional FM and AM which is broadcasted from the ground. Some of the benefits of satellite radio are a wide variety of program choices and static free anywhere you travel. In most cases, some of the stations are commercial free but you have to pay subscription costs, I’ll touch on that later. As I mentioned before, there are two major players in this market known as XM Satellite and Sirius Satellite.

It’s only best we talk about XM first since it is the bigger of the two as far as market share is concerned. In 1992, XM launched its two satellites into orbit called “Rock” and “Roll” which the signals would be broadcasted from. For $12.95 and an XM receiver, you can start listening to XM radio. The service’s lineup includes stations like USA Today, 70 channels of music, CNN and The Weather Channel. XM’s exclusive programming includes NASCAR as well as Major League Baseball content. The company has exclusive vehicle contracts with manufactures such as Honda, GM and Acura. By the year end of 2005, XM is expected to have somewhere around 6 million subscribers and revenue of about $500 million. Since XM is larger than Sirius, it should have a larger market capitalization, right? Wrong. XM is worth close to $8 billion as its satellites weren’t as expensive as that of Sirius.

Sirius satellite is XM’s only competitor for now. One major difference between the two companies are the costs that they put up to service their satellites. Sirius positioned three satellites in an orbital pattern in hopes to create better reception and act more effectively. As well, Sirius has a fourth satellite on reserve just in case they were to run into a problem with one of the orbiting satellites. Sirius has about 120 total channels and covers exclusive content such as NASCAR by 2007, Howard Stern starting sometime in 2006, and soon to be Martha Stewart. They have a distance second place in this market as by year end of 2005, they hope to have roughly 3 million customers, less than that of XM and only have revenue by year end in the $200 million range, Sirius is also $12.95 a month.

So now comes the fun part and the big question of which one is the better investment? Well, that all depends on how you want to play this market, long term or short term. Remember that I am not an analyst; this is only my opinion and based on speculation and the balance sheets of these two companies. If you want to play this market short term, I recommend XM as a buy because of a good balance sheet, the number of subscribers and it expects to outperform the rival Sirius. XM’s cash flow balance is expected to break even somewhere by 2007 with sales in 2015 around $5 billion.

Sirius however in my opinion is a better buy long term as the stock price is also cheaper so it has more upside growing room as XM would. Sirius is expected to breakeven around 2009, due to the higher initial investment costs for the company. However, by 2015, Sirius is expected to have sales higher than XM at about $6 billion. I believe the saying, “Slow and steady wins the race” works in this situation, Sirius got off to a slow start but will surge in revenue and subscribers come long term.