Superstar CEO Mel Karmazin said on Thursday that Sirius' holiday sales were strong, but might fall short of last year's subscriptions.

"Business is very strong, very good," Karmazin told the Reuters Media Summit in New York. But he added: "We have a very difficult comparison this fourth quarter."

"Assuming that we have a very good last 10 days, then we'll be just fine," Karmazin said. Last year Sirius signed up around 500,000 new subscribers in a 10 day period.

"If in fact, God forbid, we don't, December will go from being what we hope it will be, which will be the very best month in our history, to the second-best month. But no matter what, it's amazingly strong."

In a recent report released by Bank of America Analyst Jonathan Jacoby, it was stated that channel checks with retail buyers (not sellers) indicate that gross retail sales will decline by 20% in the fourth quarter.

Now, that's down 20% year-over-year, mind you. Last year around this time there was a frenzy in retail as Howard Stern's departure from terrestrial was only three weeks away. So a YoY decline of only 20% is actually, not too shabby. Considering the hype and hooplah that surrounded the industry in 2005, a mere drop of 20% is a good sign of the industry's strength in my opinion.

So let's take a look at some different areas of interest now that Black Friday and Cyber Monday are behind us. First, here's the Alexa traffic numbers during a 7-day period:

This shows that Sirius still leads XM in traffic, a look at a one-month period shows Sirius benefitting much more from weekday traffic than XM as well. Traffic can be inferred as a level of interest - not necessarily in sales, but in product research. Net-savvy users will research their options for their holiday shopping ahead of time. Sirius seems to be doing well.

A look at Amazon's Car Electronics best sellers shows satellite radio clearly dominating the category, with more XM products in the lead. Amazon's Satellite Radio category shows a similar favor towards XM. It's not all peaches and cream though, because satellite radio is no where to be seen in the Electronics category.

Looking at eBay's Consumer Electronics category shows a fair number of satellite radios being listed (nearly 6,000 items in total - the key would be to see this number grow in the coming weeks). The wearable/handheld units seem to be the most popular on eBay, which is really no surprise.

Now ShopperTrak estimated that Black Friday sales were up 6% from last year, but it was flat-panel TVs and computers that dominated the consumer electronics category. Unfortunately "Cyber Monday" ended up being a bust... well, not a bust necessarily, but just yet another holiday shopping day. While Microsoft's Xbox 360 Core sold out in 30-seconds for Amazon's door-buster campaign; the much hyped (and ugly) Microsoft Zune is falling fast on sales charts. There's a lot of competition this season for satellite radio, and nothing is a guarantee.

Remember, last year SIRIUS added 1,142,640 net subscribers and XM added 898,315 net subscribers in the fourth quarter (Gross Subscribers: 1,266,674 and 1,373,876 respectively). During the same period SIRIUS added 900,645 net retail subscribers, while XM added 782,420 net retail subscribers. So a 20% hit in retail - if equally applied to both XM and SIRIUS - would mean an estimated 720,516 net retail subs for SIRIUS, and an estimated 625,936 net retail subs for XM.

As a reminder, to meet guidance SIRIUS needs to add 1.18 Million net subs, and XM needs to add 515,000 to 715,000 net subs. 

In a SmartMoney interview with Mel Karmazin (via SSG), the subject touched upon the beaten-horse topic of a possible SIRIUS+XM merger.

Karmazin's response isn't that of complete dismissal, but rather he leads the answer in a suggestive direction stating that his focus is on "value and wealth creation" and that "mergers allow for that." Not necessarily saying anything, but teasing with the suggestion nonetheless.

When asked the same question by Bear Stearns analyst Bob Peck only a few weeks ago, Mel had a more conversative response in that he didn't "have very much to say about any hypothetical combination that could or could not exist." (He later went on to say that Sirius is going to kick XM's ass).

Karmazin then turned the topic to the regulatory hurdles - which most believe would be the biggest barrier to a merger occuring:

"I personally believe regulatory agencies are not a problem. If there's an iPod with terrestrial radio, it's hard to believe government is worried about two satellite radio companies combining."

I'm not sure I personally buy that argument and I doubt the regulatory powers-that-be do either. iPods with FM receivers have little to do with FCC-granted SDARS licenses. But for a topic that inevitably - and so easily - drives up stock prices (and drives Jim Cramer into a frenzy... which isn't difficult), why not use a little suggestive language?

[SmartMoney] 

The Quick Glance:

• Sirius October 2006 Retail Sales:
  Down 26% YoY
• XM October 2006 Retail Sales:
  Down 23% YoY

Marketshare:

• Sirius Oct '06 Retail Marketshare: 56%
• XM Oct '06 Retail Marketshare: 44%

Looking at purely the numbers, this supports the argument that the satellite radio retail channel has reached it's peak, but that only comparing the year-over-year numbers. Expecting the same - or greater - growth as last year is completely unrealistic. This is also the first time since April that Sirius didn't see better year-over-year growth, percentage wise, than XM. The Stern Effect was in full swing at this time last year, so again it's unrealistic to expect the same growth this year. I don't care what the skeptics say, it's just not possible.

2005 was a breakout year, and ridiculous money was being spent in order to maintain the momentum. This helped growth (gotta spend money to make money). From one side the critics say that satellite radio needs to control costs, from the other they say it needs to add subscribers. The key is finding that sweet spot somewhere in between.

That said, Sirius still expects to bring in more subscribers this Q4 than they did last Q4. They've reiterated their year-end guidance of 6.3M net subscribers, so they're obviously confident that they can pull it off. I'm just not exactly sure how.

SoundExchange issued a press release on Friday announcing the findings of a recent "study" of theirs. The purpose of the study is to find out... whether music is important to satellite radio. Yes folks, someone actually spent money on this. Are you ready for the amazing stats? Here goes:

43% of respondents said they would cancel if their satellite radio service didn't have any music (OMG!). 53% said they that music is the most critical programming factor (OMG!). People spent nearly half their time listening to music (OMFG!). And, hold on to your hats, the respondents on average would not pay the full $12.95/month for satellite if it didn't have music (OMFGROFLMAO!).

The purpose to this press release is obvious and the ulterior motive is completely transparent. As a result, this release hasn't (and won't) get any traction in the media. Nope, nothing. Sorry guys, try again (or try offering a realistic deal).

A recent report by Bridge Ratings has indicated that foot traffic is on the rise for satellite radio retailers. Great news, but the even bigger bit of info is the increasing interest coming from the college crowd.

So what's is causing the rising interest in this demographic?

Here's the data points: 57% of college-age shoppers would prefer a portable satellite radio, 27% would prefer in-car systems while an additional 16% have no preference at all. The question in my mind is: what's the definition of "portable" and "in-car" when the interviews are presented?

"Portable" satellite radios are sometimes used to describe "transportable" or "plug-and-play" units, while "in-car" can be considered an in-dash headunit. But for those outside of the biz, a "portable" could be an Inno/Stiletto style unit, while an "in-car" unit could be a plug-and-play (since that's where they're primarily used). I wish Bridge would clarify this, because it's an important differentiation.

Still the "on-the-go" versus the "in-car" preference could indicate several things. One being that Gen Y doesn't see being tied-down as an option. Why get a device if it's not going to be portable? Another consideration is that this age group may not have cars (campus life doesn't always require one). Or even that they consider in-vehicle listening to be a secondary function for music experience (personal listening being the leading). Hell, I listen to my iPod in the car, why wouldn't I want a portable satellite radio? The possibilities are endless.

In terms of interest, Sirius is kicking ass among college kids. Breaking down the age groups further shows that 18-19 year-olds favor Sirius (67%) to XM (33%), while 20-21 year-olds favor Sirius (52%) to XM (48%) by a much smaller margin.

This is interesting in itself. It shows that Sirius has a clear advantage in terms of awareness in this group, no doubt led by Stern. The different programming initiatives by each company most likely have a different effect on appealing to college-age consumers as well.

But what I don't understand is why the spread evens out so severly as they get older.

[Bridge Ratings]

The WCS Coalition, a group including Sprint Nextel, BellSouth, NextWave, AT&T, Comcast and the WCA, complained to the FCC that Sirius Satellite Radio and XM Satellite Radio should not be allowed to continue operating unauthorized and over-powered terrestrial repeaters in the 2 GHz band.

The group argue that XM and Sirius need to address interference problems from satellite radio terrestrial repeaters that are transmitting at higher-than-authorized levels and operating without authorizations.

In an FCC filing, the WCS Coalition said that the FCC needs to adopt rules "that provide for reasonable coexistence of WCS and DARS in the United States."

Recall that XM lowered or turned off repeaters that were operating above or outside the authorized levels in early October. Shortly afterwards Sirius shut down 11 repeaters that were operating outside of specified levels. The rhetoric from the wireless broadband industry has been much more aggressive since these filings.

[more on RCRNews] 

XM has signed on DBL Distributing as a National Preferred Distributor for XM Satellite Radio.

DBL is one of the largest consumer electronics distributors with a network of over 30,000 dealers under it's wing. This deal will provide them all with access to a large selection of XM products, subscriber activation commissions and order management tools provided by DBL.

Eligible dealers get access to DBL's online account management tool which lets dealers view orders and ship dates, account activation status and commission payment status; all in real-time.

Now that the numbers are out, let's take a look at gross subscriber additions between both Sirius and XM.

Looking at gross subscriber additions is a more accurate way of looking at the trending of the industry and gives a better feel of the pulse of the market. It eliminates factors like churn, which as the subscriber base for each service increase, creates the illusion that industry growth has slowed. Yes, net subscriber additions are extremely important and are in fact the "true" indicator of growth, but gross gives us a look into market penetration.

So with explainations out of the way, let look at it shall we? For the 3rd quarter of 2006, here's how gross subscriber additions stacked up:

SIRIUS Gross Subscribers: 732,406
XM Gross Subscribers: 868,007

Now since we're talking about trending, let's take a historical look at gross subscriber additions per quarter, starting from the beginning of 2005:

Here's the data:

Of particular interest is how 2006 is trending. We all expected the spike in 4Q05, but since then it's been nothing but downhill. Ignoring the 4th quarter, let's look at the same periods in 2005 - there was nothing but growth. This is all the more reason why managing churn needs to be high on the priority list for both companies.

It's also a good thing that both companies have saved up their marketing cash for a big pop this quarter... the 4th quarter is going to need it.

During today's earnings call, Bear Stearns Analyst Robert Peck asked Mel Karmazin about what he felt was the "pulse" about the potential merger between XM and Sirius, and whether it's a feasible situation.

Mel Karmazin poignently responded that while there would be a "good amount of value creation" in the case of the merger, he really has nothing further to talk to about it.That's not to be taken as a positive, or a negative - just that there's nothing to say.

Karmazin continued:

"You should assume that we will be looking to kick their [XM's] ass, in the fourth quarter," Karmazin added, "...and they're looking to do the same to us. We are competitors."

Talk about not mincing words.

Hopefully that sends a clear message (to Jim Cramer particularly) that Sirius and XM are wholeheartedly locked in a battle for marketshare against each other.