XM Satellite Radio in a recent SEC filing reported that they have lost their arbitration claim to recover  the remaining 20% of the value of the two Boeing 702 class satellites put in orbit (XM-1 and XM-2).

In July 2004, XM reached agreement with insurers that covered 80% of the amount insured. The problem lies with a progressive solar array power degradation issue that is common to the first six Boeing 702 class satellites put in orbit. XM-1 and XM-2 just happen to be the fifth and sixth Boeing 702s launched. XM walked away with about$142 million from the insurers thanks to this.

In August 2004, XM filed for arbitration to get the remaining 20% of the insured amount. It's this claim was rejected, and no further proceeds will be given.

Oh well. You win some, you lose some.

Hugh Panero, CEO of XM Satellite Radio, and Oprah Winfrey rang the NASDAQ Opening Bell this morning to celebrate the debut of the "Oprah & Friends" channel on XM Satellite Radio.

Joining them were Oprah's "friends" who host shows on the new XM channel: Dr. Maya Angelou, Nate Berkus, Jean Chatzky, Bob Greene, Gayle King, Dr. Mehmet Oz, Dr. Robin Smith and Marianne Williamson.

Check out photos from the NASDAQ opening bell after the jump...

XM Satellite Radio's Chairman of the Board Gary Parsons will participate in a question and answer session at the Goldman Sachs Communacopia XV 2006 in New York City, Wednesday, September 20th, 2006, at 8:10 am ET.

A live webcast of the session will be available online.

NPD Group's August sales data (available on SSG) have showed the first decline in the satellite radio retail channel, when compaired to the same period last year. Unit sales for the industry as a whole fell 3% year-over-year in August, while in July satellite radio retail sales actually increased by 2% YoY in July.

The Quick Glance:
Sirius August 2006 Retail Share: 55%
XM August 2006 Retail Share: 45%

Sirius' unit sales were up 16% YoY in August, while XM's unit sales were down 19%. Compare this with July, where Sirius' YoY unit growth was up an incredible 49%, and XM's YoY unit sales were down a whopping 29%.

The Analysis:
Sirius Satellite Radio's retail share has been 54% or better for every month since September 2005. That my friends is The Stern Effect in action. Unfortunately this also sets the bar very high for the coming months, and with the amount of retail activity we saw in Q405 it'll be hard to show a year-over-year increase this year. Sirius' share was 55% in August, in line with September 2005 (55%). XM's share on the otherhand was 45% in August, compared with 54% in September 2005. For the past 12 months, Sirius has dominated the satellite radio retail market share.

Going forward, I just don't see Q4's retail sales showing any sort of YoY growth from 2005. 2005 could almost be discounted as an anomoly (almost) because the subscriber growth was just not indicative to a "natural" curve. Stern changed everything last year and the hype he generated will be extremely difficult to duplicate this year. I'm not being a Negative-Nancy, just trying to set some realistic expectations for the months to come.

Does this support the theory that satellite radio retail sales have reached their peak? I'm not so sure, but the months ahead will be difficult.

A recent report by Bank of America analyst Jonathan Jacoby states their belief that the satellite radio industry's annual retail gross adds could be nearing its peak.

Citing that the "early adoption phase appears to have passed," BofA now estimates that gross subscriber additions from the retail channel will flatten out from 2006 to 2007. What's worse, they project retail adds to begin to decline after that point.

What this does is put a greater dependency for subscriber additions on the OEM channel. Greater reliance on auto manufacturers puts both XM and SIRIUS in a weaker position when distribution agreements are up for renewal.

But while the early adoption phase may be ending - for today's receivers - I wonder if innovation in technology can combat this looming peak? The wearable receivers are evolving, and with a total of nearly 59 million iPod sold, there's obviously a market for personal music - and the possibility for satellite radio to engage even a fraction of this audience.

Then there's the home. With innovations like SiriusConnect Home and the XM Mini-Tuner, satellite radio has the potential of being embedded now into many home entertainment systems. This type of convergence that integrates satellite into home electronics exposes the technology to a whole new market. I think there's a massive potential to this market. The key? Give away free trial subscriptions with the purchase of these satellite-ready devices.

So let's open the floor to some discussion. What areas of potential growth in retail do feel are untapped? What devices do you believe will help spur a surge in retail?