After 2Q06 earnings calls once again pumping up the importance of auto manufacturers to the future of satellite radio, I went car shopping last week expecting to see a big push. Instead, my first stops turned up erratic in-dealer marketing for factory-installed XM or Sirius. One dealer had a little signage, another had a bookmark-like piece of promo material under a windshield wiper. (Yet another dealer promised “iPod-ready” cars—turns out that means they’ll add the mounting.) Too anecdotal to mean much but a sign of the distance between getting manufacturers to include the radios and getting them either sold or in use.
Sarah McBride highlights the trouble XM had with one non-customer who never turned on the service in her Audi, part of a look at why XM and Sirius are having trouble converting potential into reality. Example: Sirius has some 1.4 million car-based subs—more than half get the service free, Deutsche Bank analyst James Dix estimates. One of the biggest tests comes at the end of the year when it’s time for the first wave of DaimlerChrysler owners to renew as one-year trials paid for by the manufacturer wind up. One measure of how likely they might be to convert—Chrysler started turning on the service at the factory because of the large numbers who weren’t bothering to use the 800 number to activate.
Hollywood Reporter:  On The Hollywood Reporter/Bloomberg 50 Entertainment Stock Index, XM comes in last and Sirius is just two rungs above. Since Oct. 2004, XM’s stock price is down by two-thirds to $11.01 and Sirius is still well under $5—from $4.72 to $3.75. Jim Cramer is urging merger as a solution. Among other things, that would cut back on the rights price wars. Whether it would save much on marketing and rebate costs is another question—probably yes for those who want satellite but not so much when it comes to courting the others.  Sirius CEO Mel Karmazin has said he’d be interested in acquiring XM.
-- There’s no guarantee of federal approval for a merger but Ken Ferree, who was at the FCC when DirecTV-EchoStar was denied told HR the sat radio situation is different because the market—if defined broadly—includes free radios and auto-integrated iPods.