It’s no secret I’m a big fan of XM Radio. Honestly, I don’t know why anyone would buy Sirius at this point, unless they’re a huge NFL fan, but even then, why not either watch the game on TV or buy Direct TV?

Anyway, Howard Stern is going to Sirius and is getting off commercial radio. All six of the people who still think he’s funny are really going to miss him, but I digress. Since Sirius and XM have been locking horns for a long time, the mudslinging has gone back and forth fast and furious. Something that has recently come up, though, is that Sirius isn’t actually playing fair with their subscriber numbers:

Sirius added 359,000 new users in the third quarter, nearly doubling its year-ago increase. At first blush that looks far more impressive than the 48% subscriber growth at rival XM Satellite .

But it turns out that not all those new Sirius subscribers are actual people.

XM and Sirius both count on arrangements with big automakers like Ford (F:NYSE - news - research - Cramer’s Take) and GM (GM:NYSE - news - research - Cramer’s Take) to power subscriber gains. But where XM waits until a car buyer activates the service to add to its new-user tally, Sirius sometimes starts counting as soon as a car with a factory-installed radio arrives at the dealership.

So a number of those freshly minted Sirius subscribers could actually be Chrysler Concordes sitting on a dealer’s lot somewhere. Observers say that kind of liberal math could be bolstering Sirius’ growth — especially now, as dealers are receiving a new crop of 2006 models.

Sirius’ practice means the company can “call it a sub, even if it is sitting under water on a dealer’s lot in New Orleans,” says one investor who sold Sirius and holds XM.

Now, I work in the wireless industry. This would be akin to T-Mobile calling every phone shipped to a dealer a subscriber. Needless to say that no one doing such a thing should be taken seriously, but think about the implications of that.

Sirius, of course, defends the misrepresentation of their subscriber numbers:

Frear says he counts the car as a subscriber because that’s when the car company pays Sirius for the radio subscription. He says Sirius receives the one-year subscription money upfront from the carmaker and defers the revenue by booking it in monthly installments or amortizing it over the life of the service contract. Sirius also books the subscriber acquisition costs upfront.

So whether or not you make an active effort (ie: buying a Sirius satellite receiver), you’re a subscriber just because you have one in your posession that you may or may not actually activate (what Frear doesn’t tell you is that just having it doesn’t mean you get the service; in order to get the service you have to call up and turn it on, so that “subscriber” may not ever actually hear a single show on the network).

Shouldn’t come as a surprise, though. Howard Stern has been claiming Sirius has 3 million subscribers due to his announcement that he’s going to be appearing there in January on Channel 100. Unfortunately for Howard, they don’t even have 2.5 million yet. I guess lying about the numbers is a Sirius thing.

Source: The Street