It's been a long time since XM Satellite Radio(Nasdaq: XMSR) rock and rolled. True enough, it was in the spring of last year when Sea Launch successfully shot XM's geostationary satellites -- aptly named Rock and Roll -- into orbit. It was the start of a musical revolution. Literally. Figuratively. Not necessarily unequivocally. 

With November's nationwide service launch, subscribers with XM-ready receivers could tune into 100 digital channels of nearly uninterrupted broadcasts from coast-to-coast. With retailers such as Best Buy(NYSE: BUY) promoting the free installation of XM receivers starting at about $200, and with the subscriber service priced right at just $9.99 a month, it was music to the ears of the jaded radio listener. It was an easy sell, even if the space race was about to get crowded.

The Sirius problem
Fashionably late after botched timelines and a management shake-up, Sirius Satellite Radio(Nasdaq: SIRI) rolled out its competing service earlier this year. On Feb. 14, the upstart was introduced into four metropolitan markets. Whether it chose Valentines Day as a lovers' holiday or for the imagery behind the grim gangland massacre that shares the date, like just about everything else Sirius has done, it has been a case study in extremes and symbolism.

While simple in practice, satellite radio is rocket science in theory. That found Sirius struggling to keep pace with XM in a battle that included everything from landing choice content programming to establishing relationships with carmakers willing to embrace the satellite-ready future. Sirius lined up backers, but it lost some serious footing on the clock against the first mover.

Like the second man on the moon, it was hard for Sirius to create a Buzz for its wares. By the time Sirius officially launched its nationwide service in July, XM had already landed 136,718 subscribers. Sirius was not as fortunate. With 60,000 Sirius-ready radios by Kenwood and Jensen in the retail system for July's official launch, the receivers collected more dust than interest. Charging 30% more a month for its satellite-radio service than XM proved to be a tough hurdle to clear for Sirius, despite the worthy selling point that its 60 music channels were commercial-free. By mid-August, Sirius was only closing in on its first 7,000 listeners. (Last January, the Rule Breaker Portfolio shorted Sirius.)

Forced to hose down its subscriber targets with a cash crunch looming, Sirius was in serious trouble. The company that became a sucker for symbolism when it chose Jackson, Miss., as the gala event hub during its February launch (because the town also served as the birthplace for satellite television eight years earlier) was at it again. Named after the Dog Star, with the canine mascot to show for it, the fading stock was clearly one for the dogs.

XM marks the spot
If you believe good fences make good neighbors, you won't find many sectors with higher fences than the world of satellite radio. Between the satellites, chipsets, repeater stations, and launches, the tab is already running at sky-high levels before you dabble in the infrastructure overhead of content and marketing.

XM and Sirius have already combined for an accumulated deficit of more than a billion dollars, and the bleeding of red ink continues. Can they duke it out or, at least, come together in the pursuit of big bucks?

Why not? Despite depressed share prices and debt covenants that could bring either company to its knees in a Don Henley minute, there's muscle on reserve that neither company is flexing right now.

Three years ago, General Motors(NYSE: GM), Clear Channel Communications(NYSE: CCU), and DIRECTV invested $250 million collectively in XM. The stakes were significant, but so were the implications. With its foot in Motown's car door, along with beefy investors with ample radio and satellite experience, XM became relevant. Sirius assembled a pretty nifty guest list as well, revving up factory-equipped carmaker deals with Ford(NYSE: F) and DaimlerChrysler(NYSE: DCX). While ironclad commuters and professional drivers have flocked to satellite radio, plug and play receivers are now making the service portable. The casual driver and the homebody are now in the marketing crosshairs.

Cynics first scoffed at the prospects of cable and satellite television. Who would pay for televised content when rabbit-ear antennas were free for the turning? They winced. They reasoned. They wanted their MTV. Why not satellite radio? Why not XM? With its stock recently dipping below $3 a share last month, XM's market cap has fallen to the sum of that $250 million investment. Granted, the company sports a debt load twice as large as that sum and a cash balance in embers. But the connections are there, and the consumers are coming.    

Cacophony in the key of Canis-major
Sirius is singing a different tune right now. Swallowing hard to subsidize a new $75-receiver rebate and warning that the company will need to raise another $600 million to continue operations by next year, the song remains the same at Sirius. And that song is starting to sound like a dirge.

If Sirius has any shot of making it as an independent entity, it needs to build up its subscriber base, and that means a rate cut might have to accompany the rebate. From that point on, the case studies run deep in the satellite television space. Basic cable discovered premium channels and pay-per-view events, and that has helped prop up both the monthly bills and the annuitized value pegged on typical cable subscribers. Some analysts are assuming basic-subscriber fees and meager ad money are as good as it gets in satellite radio, but the revenue streams are already beginning to open up. Next month, XM's basic plan will include just 99 channels. For an extra $2.99 a month, listeners can tune into Playboy(NYSE: PLA) Radio. Playboy? On the air? From rabbit ears to centerfold bunnies, satellite broadcasting has come full circle.

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Rick Aristotle Munarriz started taking classical piano lessons when he was five years old. He quit after his second recital. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.