FCC Setback for XM

XM Satellite Radio (XMSR Quote - Cramer on XMSR - Stock Picks) says regulators have found emissions trouble with a second radio and suspended production of six additional models.

The Washington, D.C., pay-radio shop says it received a letter on Monday from the FCC requesting information on six more radios -- the Sportscaster, Roady XT, MyFi, Airware, Tao and Roady 2 devices. The FCC has also found the Audiovox Express to be noncompliant, XM says in a federal filing Friday.

The company first ran into problems in April, when the Federal Communications Commission said the Delphi Skyfi2 radio's FM transmitter failed to stay within emission limits.

The emission issue is specific to radios that use FM signals to transmit XM's programming to devices like car radios. This FM signal allows users to play XM radio through their car or conventional audio equipment. If, for example the FM emissions are too strong, it could cause interference with other radio channels.

"We will respond promptly to the latest FCC request and have implemented a series of actions involving our radios designed to bring them into compliance," XM said in its filing. "We have also requested our manufacturers to suspend production and/or shipments of radios or accessories with these issues."

The news comes as rival Sirius (SIRI Quote - Cramer on SIRI - Stock Picks) was informed Thursday by the FCC that three of its radios with FM transmitters had cleared emissions testing.

XM has had a series of stumbles this year, including twice lowering its subscriber target and the alarming departure of a director who could no longer bear the company's costly growth strategy. Meanwhile, Sirius has been capturing market share and has repeatedly boosted its user targets.

XM shares were down 26 cents to $10.92, and Sirius was up 3 cents to $3.80 in early trading Friday.