Sirius Loves Sanjaya

His singing is often as out of touch as his hairstyle, but America doesn't seem to mind. American Idol contestant Sanjaya Malakar has been spared through several elimination rounds.

His eclectic ways have made him a cult favorite, despite his vocal shortcomings. A polling system that lets fans vote for who they want to stay on -- instead of who they want off -- has helped Sanjaya survive. Another factor helping Sanjaya's cause is that Sirius (Nasdaq: SIRI  ) talk show star Howard Stern has encouraged his audience to discredit the popular show, broadcast on News Corp.'s (NYSE: NWS  ) Fox network, by keeping Sanjaya on.

Most people feel that Stern is saving Sanjaya. I see it differently. Sanjaya is saving Stern. Think about it. Now that Stern is playing to smaller paying audiences at Sirius, when was the last time he made headlines the way he is now?

In a brilliant move, Stern has been able to piggyback on the success of American Idol, playing an integral part in one of the more fascinating developments of an already popular show.

The non-Sirius subscriber is now starting to read about what Stern is saying on his show. Curiosity is starting to kick in, just as it did when Stern went on a media blitz over the 2005 holiday season, as he bid terrestrial radio goodbye.

Stern has served Sirius well since his arrival 15 months ago. Sirius has continuously lapped XM Satellite Radio (Nasdaq: XMSR  ) in landing net new subscribers. However, after years of growth, Sirius expects to tack on fewer net accounts this year than it did last year. XM peaked two years ago.

Net New Subscribers (XM + Sirius)

2005

2.7 million + 2.2 million = 4.9 million

2006

1.7 million + 2.7 million = 4.4 million

2007

1.4 to 1.6 million + 2 million = 3.5 million

Can Sanjaya save more than Stern and Sirius? Could he save satellite radio itself? With the planned merger of Sirius and XM -- no matter how unlikely -- a simple Sanjaya-pimping stunt may be just what it takes to awaken retail interest in satellite radio again.

XM is a former recommendation in the Rule Breakers newsletter service.

Longtime Fool contributor Rick Munarriz has been a Sirius satellite subscriber since 2004 and an XM subscriber since 2006. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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