If you want to turn heads with $3 million, there are plenty of ways to do it. You can buy the original 1969 Dodge Charger that starred as the General Lee car on The Dukes of Hazzard. You can also pony up for Mark McGwire's 71st home-run ball of the 1998 season, presumably buy a popular Facebook app, or purchase Jessica Simpson's Beverly Hills home.

Or you can do what XM Satellite Radio (NASDAQ:XMSR) director Jeffrey Zients did -- buy 270,000 shares of your own company's stock at $11.14 a share last week. It's a bold bet, the largest insider purchase at the company since its IPO eight years ago.

Earlier this month, in a "Fool Video" segment with Mac Greer, I argued that buying XM makes sense if you believe that its merger with Sirius Satellite Radio  (NASDAQ:SIRI) will go through. Beyond the obvious realized synergies involved in a corporate combination, XM is trading at a discount to the terms of the deal.

Buying the marked-down XM will give you more bang for your buck when -- or if -- it merges with Sirius later this year. You'll get the best of both satellite radio services for less than going with the higher-priced Sirius.

Two hearts beat as one
But will the deal go through? That's the question that's keeping even opportunistic arbs from piling on to make the most of spread by going long XM and shorting an equal exchange ratio amount of Sirius. This week's successful Whole Foods Market (NASDAQ:WFMI) acquisition of Wild Oats has some believing that the FTC may lighten up on the proposed pairing of XM and Sirius.

That's a bit of a stretch. No one has found Mel Karmazin as a stock-message-board troll under the screen name of Rahson (the jumbled letters of his ex-wife's name, Sharon), talking down Sirius detractors. Unfortunately, that's not the only difference. Whole Foods and Wild Oats may be the two leading organic grocery store chains, but much larger supermarket concepts have been widening their whole food offerings in recent years.

XM and Sirius can point to the terrestrial radio, HD radio, and Internet radio as competitive products, but those are all mostly free audio services. A better case can be made for premium digital music services like iTunes, Napster (NASDAQ:NAPS), or RealNetwork's (NASDAQ:RNWK) Rhapsody, but those are seen mostly as virtual jukeboxes than paid programming.

It doesn't help the pro-merger camp's cause that the two leading satellite-television companies were denied the wish to merge despite the plethora of cable providers, DVD retailers, and video-rental chains.

This doesn't mean that all hope is lost, though. The FTC has been overloaded with conflictive nuptials lately. As it installs a "take-a-number" machine, it also can't ignore the changing digital -music marketplace.

Every car that rolls off the lot with an iPod jack is a competitive threat to XM and Sirius. Every cell phone that comes loaded with MP3 storage is a threat to paying up for satellite-radio service. Every music-discovery website rolling out its own programming-powered media player with a car-kit accessory is an assault on the renewal rates of existing XM and Sirius automobile subscribers.

A cynic would argue that XM and Sirius can't win. If the deal is passed, it's only because the competitive threats are too great. If the deal is killed, each company will still be years away from profitability.

The case for XM without Sirius
XM's latest quarter was a bit of an eye-opener. Yes, the company continues to lose market share to the faster-growing Sirius, but XM isn't exactly stuck in the mud. It posted a 22% top-line gain, narrowing its reported deficit along the way. Unfortunately, just 53% are actually paying for XM after the free trial period ends. Offering lower-priced deals -- either as a result of the merger or by introducing a "basic" content offering on its own -- may be the best way to win back the rejecters who can't justify paying so much for something they rarely use.

Lower prices doesn't mean lower operating profits. A company such as Netflix (NASDAQ:NFLX) can make healthier margins on some of its lower-priced subscription plans. An XM basic programming option would be even better, the equivalent of a hotel chain turning to Priceline.com to unload at a discounted price rooms that would have sat vacant otherwise.

So instead of approaching this merger dance as a lose-lose situation, I see it as a win-win scenario. If the companies combine -- and graying FTC members are just out of touch with the competitive landscape in spoken content if they kill the deal -- you'll have two companies that are able to hack away at overhead redundancies to run a leaner, more flexible operation (with more subscription options, too).

If the deal is killed, Sirius and XM should walk away from the negotiating table smarter than when they first came in. Lower-priced plans -- or possibly even ad-subsidized plans -- hold the real key to drive the medium beyond the initial wave of early adopters. In studying the competitive threats, they will also be better positioned to take them on in the future.

So why is Zients buying? Maybe he even isn't quite sure, himself. All we know is that you have a stock trading at a third of where it was just two years ago. It's more popular now. It's smarter. Its uninspiring financials point out the clear risks involved, but that's already baked into the price. So perhaps the real question isn't so much why Zients is buying, but rather why other insiders aren't following suit.

For related Foolishness:

XM Satellite Radio is a former Rule Breakers stock pick. Don't worry, the newsletter recommended that subscribers sell the stock last year, sparing investors a precipitous drop since then. A free 30-day subscription will shed some light on the rise and fall of the stock's potential. Netflix and Priceline are Stock Advisor staples.    

Longtime Fool contributor Rick Munarriz subscribes to both XM and Sirius, but he does not own shares in any of the stocks 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.