Reality May Be Catching Up With Satellite Radio Hype

Burned numerous times already, investors continued to shy away from Sirius as they fretted about one last major concern overhanging the company: Why, they wondered, had Ford(F Quote) and DaimlerChrysler(DCX Quote) -- which had previously said they planned to install Sirius in their cars to counter GM and Honda -- failed to announce any specific models due to get the service? Was it possible that Ford and DamilerChrysler would jilt Sirius and bolt over to the XM camp? If that were to happen, Sirius would be in the most serious trouble of its long and troubled life.

On April 16, however, the Mercedes-Benz division of DaimlerChrysler announced it would offer an integrated Sirius system on most of its 2004 line and BMW announced it would install the line in its hot new MINI Coopers. And last week, Ford finally announced that it would install Sirius' system in its Mustang, Thunderbird, Lincoln and Mercury lines. Car rental giant Hertz also announced it would provide Sirius in cars at 33 airports across the country. That was enough to send the shares from 69 cents in mid-April to their current perch around $1.30.

Now, the Issue Is Service

With financing set, for now, and customers on the line, the two companies have to deliver on their promised products. And in some ways the next phase could be the most challenging of all, as they must transition from manufacturers of a technology into providers of a service. The money in this business going forward is not in the sales of receivers, boom boxes and antennas, but in monthly subscriptions to a distinguished lineup of content.

It's the early days of America Online(AOL Quote) or Cablevision(CVC Quote) all over again, as the companies will be judged each quarter not by the money they actually earn but by the number of new sign-ups -- customers to whom, it will be assumed, they can sell advertising and other services for years on end. A monthly subscription runs $12.95 for 60 channels of commercial-free music and 40 streams of sports, news and talk.