These have been quiet trading times for satellite radio pioneers XM (NASDAQ:XMSR) and Sirius (NASDAQ:SIRI). Both services continue to sign up new digital-radio fans, hand over fist. But unlike the two previous years, when their shares appreciated a few times over, the companies have seen their stocks getting stuck in the mud lately. The rut has led some observers to believe that the industry may be dead as a stock play.

Silly cynics. You'd think they had never seen dynamic growth stocks simply pausing to catch their breath.

Let's take a closer look at XM's third-quarter report from last week. Even our own Seth Jayson cast a critical eye toward what he considered "dubious growth" at XM. I disagree with him. As Fools, we can do just that. I can call him out. And he can come back tomorrow and call me out for calling him out. It's pretty cool.

Anyway, Seth claimed that XM's growth was dubious because its losses widened during the period. Let's clear that up. Revenues rose by 134%. Net loss grew by 12%. Does that sound dubious to you? Net margins improved substantially during the period, and Seth believes it warrants a cocked brow? I don't think so.

Here's a company whose subscriber base has doubled over the past year to 5 million listeners. The company is out $53 in subscriber acquisition costs for every new account, but that's down from $57 a year ago. Tack on the ramped-up advertising and marketing campaigns, and XM is paying $89 for each gross addition. When you sign up 617,000 new members, that's $55 million spent -- a good chunk of the $134 million loss -- to land a subscriber base that will generate nearly $100 million a year in subscription revenue. It's a fair trade. It just doesn't seem that way in the most recent income statement. It's more than justifiable to settle for short-term pain when the long-term gain is so alluring.

During the third quarter of 2004, XM reported a loss that translated into a deficit of $48 for every subscriber. This time? It's down to $27. Red ink? Run away in horror? Let's see. Another satellite subscriber business, DirecTV (NYSE:DTV), routinely operates at a loss, is growing substantially slower, and still commands a market cap that is many times that of XM. EchoStar (NASDAQ:DISH) is a distant second to DirecTV, and it, too, fetches a loftier market cap than XM. Yes, EchoStar has strung together a few profitable quarters lately, but satellite television is burdened with the same programming costs that gobble away at the top line of every cable or satellite TV provider. XM and Sirius have their costly sports deals and their top-shelf on-air personalities, but they have much more control over their cost structure thanks to the popularity of the commercial-free music stations that dominate the dial. These are also fixed costs, making the incremental subscribers that much more profitable.

Still think XM grew dubiously? Did you notice how revenues grew faster than the subscriber count? That's because revenues per subscriber shot up by 13% during the period. That will continue to climb as more new subscribers hop on at the new $12.95 monthly price over those that were grandfathered into prepaid deals at the lower $9.95 pricing tier.

At a time when rising interest rates, pricey gasoline, and dwindling consumer confidence are all sandbagging discretionary spending, XM keeps topping its already ambitions subscriber targets.

So Seth is concerned that weakness at General Motors (NYSE:GM) will slow XM down? Is GM hurting because drivers are favoring smaller, foreign cars? No problem. XM is a factory installation in Honda cars and by this time next year will be in new cars from Toyota and Hyundai. Over the next year, XM is expecting 2 million new subs from the automakers alone with their 2006 model cars. That's not too shabby. It's also encouraging to see that XM is growing on the retail front, too, especially since selling directly to the consumer doesn't weigh the company down with the same kind of revenue-sharing deals that XM has in place with the carmakers.

Seth considers XM and Sirius "hold your nose and hope" investments. He points out that the popularity of podcasting is a paradigm buster that will nudge in on the ear space of XM and Sirius listeners. As Howard Stern's migration to Sirius shows, though, the best talent will flock to the mediums that pay. Free, or even ad-plagued, podcasts and Internet radio can't compete with that kind of farm club system. That's why everyone from JetBlue (NASDAQ:JBLU) to Starbucks (NASDAQ:SBUX) has turned to XM to entertain their patrons. Do you think they would really take their chances with anything less?

In five to seven years, when XM is looking to have at least 20 million subscribers, it won't be spending four times as much as it is today. A lot of the overhead is relatively fixed. Growth will be slower, sure. It won't be in the same place where XM finds itself now, with half of its users having signed up over the past 12 months. Other opportunities will come. Landing the most desirable audiences -- those willing to pay up for the good stuff when it comes to major-league content -- sure beats the pants off painting your ad on the left-field fence of some obscure single-A ball club.

Dubious growth? Bah! I call that spectacular growth.

JetBlue is a Motley Fool Stock Advisor recommendation.

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