In Los Angeles, the entertainment industry is the primary source of funding for our economy. Even the sludge left behind after another round of firings, shuffled executives or cancelled shows greases the slimy (but vast) subsidiary businesses -- legal or illegal. Big entertainment deals make big news here, even if the deals involve Howard Stern, based in New York or Oprah Winfrey, based in Chicago. So when Oprah signed a deal for $55 million with XM Satellite Radio, it was big news.

In the world of daytime television, Oprah Winfrey reigns supreme. She makes more money syndicating her show and The Dr. Phil Show than any other entertainer on the planet. Her book club choices propel obscure books to the top of the New York Times bestseller list. And she can wield that power to destroy an author and a book as we have recently witnessed with her very public renunciation of her support for author James Frey's book, A Million Little Pieces. He embarrassed Oprah because he represented the book as autobiographical nonfiction when it turned out to be a big fairytale. A word to the wise: Don't embarrass Oprah. At the recent funeral of Coretta Scott King, Oprah practically threw herself in the coffin and gave a very moving speech about how Mrs. King affected her life and what Mrs. King's life and legacy means to our country. It's even possible that Oprah will take on a more active civil rights role now that she is the Queen of America.

Even though Oprah is based in Chicago, her influence and money is felt here in LA. Her protégé Dr. Phil McGraw produces his show in LA and his power and money, combined with her power and money are a force to be reckoned with.

However, Oprah isn't a radio personality and she isn't pushing customers to buy cars with XM radio aren't her top priority.

Howard Stern, however, has been a mega radio star for more than twenty years. He held the top spot in the highly-competitive and highly lucrative morning drive market for nearly every rating book during his twenty year career at WXRK in New York City. His show was also the first morning drive radio show to be syndicated into other major markets and at one time, before FCC fines and indecency complaints caused some stations to drop his show, he was syndicated into more than sixty major markets and held the number one spot in many of the largest, most profitable markets including Los Angeles. While Mr. Stern was well paid for his later years at WXRK, his salary, television shows and other production enterprises can't touch Ms. Winfrey for profitability.

So it was huge news when he signed a $500 million, five year deal with Sirius Satellite Radio in the fall of 2004. That kind of money is Oprah kind of money. And it sure got the attention of the entertainment elite in Los Angeles as well as the general business vultures on Wall Street.

I've written before how the entry of Howard Stern to satellite radio would transform both the radio business and what we listen to in our cars. If you've never listened to satellite radio in your car, you are really missing something unique. When you drive to Palm Springs, you don't get static or drop the channel you were listening to. I'm an admitted Stern fan. A few weeks ago, I drove from LA to SF. I started at 6am in the morning and listened to Mr. Stern's show for five hours of the five and a half hour trip. I was completely entertained and the drive went by much faster. I also have XM as a factory-installed feature in my Audi A6, but I rarely listen to it.

With both satellite radio services, you have live music stations, without commercials. And the choice of music genre is staggering. There is something for everyone. Then there are the news channel feeds so you can listen to cable news like CNN or Fox News without the pictures. NPR and C-SPAN radio have a presence on both services as does the BBC World Service. Local traffic channels are available for major cities and left/right talk radio is available.

However, what sets each service apart is the unique programming. XM was first to sign a controversial "shock jock" duo, Opie and Anthony. XM charged a dollar extra a month to get their show. The experiment hasn't gone well and the "take rate" for their show hasn't lived up to expectations. Air America, the fledgling liberal talk radio format jumped from Sirius to XM in a contract dispute.

Sirius, on the other hand, spent much more on original programming. I've talked about Howard Stern as the star of Sirius. However, Sirius has invested heavily in unique channels and programming that each are compelling reasons to be interested in subscribing to Sirius. Martha Stewart has a hands-on role in programming her channel and she appears frequently on the various shows. Out-Q is the first and only national radio channel aimed specifically at the lucrative GLBT market. Richard Simmons preaches his weight loss message on Sirius Stars channel. The Stars Channel also includes a small show hosted by Adam Curry, former MTV VJ that features unique and interesting podcasts. The show has a cult following and has given Sirius an unexpected space on iPods and in the vast iPod community.

Then there is the live spots programming. Sirius spent big to get the NFL and the NBA. Those are major subscriber engines. XM has MLB and NASCAR -- also major draws.

But the single biggest factor has been Howard Stern. Sirius now has more than 3.5 million subscribers and its subscription "take rate" exceeds XM. That's scary to XM because while XM has more than double the number of subscribers, it's losing ground at an alarming rate. XM also lost the NASCAR rights to Sirius and beginning in 2007, NASCAR races will be broadcast on Sirius.

During the last quarter of 2005, Sirius radios were flying off the shelf. The 2005 Christmas season was key to both Sirius and XM. XM lost steam and for the first time lost ground in the race for new subscribers. In the eight days in January before Howard Stern went on the air, many customers couldn't find a Sirius radio unit to buy and activation operators were so swamped that phone systems crashed and activation wait times went from a few minutes to as much as twenty-four hours! The shortage of radios and wait for activation was even worse after he went on the air because, apparently, his fans missed his voice in the morning.

The primary market for satellite radio service is in your car. That's where most people listen to radio so it's vital to both XM and Sirius to get in as many cars as possible. So where are the major automotive manufacturers in offering satellite radio?

Let's start with BMW since my friend Jeff just leased a new 330i this past weekend. When I bought my last BMW in 2004, it didn't even have the satellite prep package. Satellite radio wasn't a "high take" option yet for BMW. Since then, BMW and Mercedes-Benz have signed exclusive deals with Sirius. For 2006, all BMWs come with the satellite preparation package, so every BMW has the ability to add satellite radio with the purchase or factory option of a Sirius module and service activation. Sirius is also available on MINI and Rolls-Royce -- BMW's other brands in the US. The same is true for Mercedes. Sirius is an option on all 2006 and 2007 Mercedes-Benz vehicles in the US.

The Volkswagen group -- including Bentley, Audi and VW -- all have options for either XM or Sirius. The latest marketing move by VW is to include Sirius (not XM) as a sales incentive on its new Jetta. VW marketers see Sirius as the more desired service and therefore are using it to lure younger buyers back to the brand.

Chrysler (in conjunction with Mercedes-Benz/parent DCX) has an exclusive deal with Sirius and all new Chrysler/Dodge/Jeep vehicles will have an option for Sirius.

Ford, while slow to the game, is now going full speed on offering Sirius (not XM) on all Ford-owned brands, including the luxury brands of Volvo, Land Rover, Jaguar and Aston Martin.

Honda has an exclusive deal with XM, but hasn't been pushing it much. However, XM is standard on almost every top-line Honda/Acura in keeping with Honda's policy of selling its cars in trim levels rather than offering long lists of factory options.

Toyota has been sitting on the fence of satellite radio. It hasn't inked an exclusive deal with either XM or Sirius and the systems aren't available as factory-installed options on all vehicles. For example, the newest Lexus, the IS, doesn't offer satellite radio as an option while its slightly older stable mate, the GS, offers a choice of either service. Toyota offers your choice of XM or Sirius on its outgoing 2006 Camry, but it's not an option on its all-new RAV-4. Go figure.

Nissan is onboard with satellite and offers either XM or Sirius across its range of 2006 models, including trucks.

Subaru, for some reason, doesn't offer satellite radio on any of its models. With some models priced in the mid- to upper-$30k range, it's odd that satellite radio isn't offered as an option. The same can be said for Suzuki. Its all-new Grand Vitara SUV is extremely well-equipped with luxury and safety features; but no satellite radio option.

The Korean Twins, Hyundai/Kia don't offer either XM or Sirius as options either. Less than a year ago, Hyundai caved to "pressure" not to carry Sirius because Mr. Stern's channels will occupy two of the 120+ channels. However, more than a year after management's decision not to offer Sirius, Hyundai/Kia still aren't even offering satellite radio on any of its 2006 or upcoming 2007 models like the Hyundai Alzera or the all-new Kia Sedona/Hyundai Entourage minivans.

And then there is Porsche. Ah, my love, Porsche. Why is there no satellite radio option in luxury sports cars costing so much? After all, no manufacturer has a longer, more egregiously-priced option list than Porsche. The sound systems and integrated navigation systems are certainly sophisticated and expensive enough to accommodate a satellite radio option. I'm sure the unexplained absence of satellite radio is the same reason Porsche doesn't offer automatic headlights on any of its sports cars: There is no reason; Porsche just decided that it's best their way.

I've saved GM for last because GM was leading the industry pushing the virtues of satellite radio in partnership with XM. GM has a large equity investment in XM and it made sense for GM to offer XM in all of its vehicles as soon as possible. GM certainly had the marketing muscle to push XM. GM began offering XM in almost all its vehicles one to two years before Sirius was even a blip on the radar screen. The GM-XM partnership put XM way ahead of Sirius with a seemingly unsurpassable lead.

But here's where both GM and XM went wrong. Both companies spent money on marketing and not on product/content. In the last quarter of 2005, XM spent $190 million on advertising rather than content or talent. All that money didn't translate into the desired increase in subscriber acquisition and retention rates. It's true that XM increased its subscriber base substantially; but it was more due to the fact that GM cars came with the radios preinstalled and the fact that customers were given a free trial subscription. Keeping those customers after the free period expires has been difficult for XM.

Sirius signed a contract with Mr. Stern in 2004, but the contract didn't begin until his contract with Infinity Broadcasting was up at the end of 2005. So while the headlines splashed the big $500 million number, Sirius didn't have to start making good on that contract until 2006. It was smart marketing because while the $190 million XM spent in marketing costs, Sirius used the marketing muscle of Mr. Stern and will still get the benefits of his marketing, program and entertainment talent for "only" $100 million a year. His appearance on 60 Minutes, Late Night with David Letterman, The Daily Show and in numerous other television and print interviews was worth much more than money. He offered a new vision of radio and its place inside our cars and homes.

So it should be no surprise that the single biggest factor for customers purchasing Sirius during the critical fourth quarter of 2005 was Mr. Stern. The NFL was a distant second motivation; but as both the NFL and NBA seasons come online, more subscribers will buy it just for those broadcasts.

While cool personal electronics and marketing are both important elements in satellite radio, what is more important is giving customers a reason to subscribe. Both offer a wide array of commercial-free music, so that the music isn't generally a deal maker. The rest of the channels are about the content -- something subscribers want to hear in their cars or homes and something they can't get on TV or "free" terrestrial radio. Ultimately, the best marketing is word of mouth from customers who like what they hear!

The same is true for GM. How many millions are spent by GM to market its products? Every month, it's another sales campaign. The marketers are working overtime to raise the image of GM in the minds of customers. The easy answer to GM's problems is having good product. GM is so hopelessly lost in its own size, overcapacity and massive dealer networks starving for product that creating outstanding product for all of its divisions seems to be a task to big to do without a major -- and I mean major -- event to happen at GM. I believe that means bankruptcy, reorganization and elimination of divisions and nameplates and consolidation of dealers and franchises. But above all, even as bad as things are for GM today, if GM had great product, it could sell its way out of a crisis.

Great cars and word of mouth from satisfied customers will sell the product for GM. This is something that millions of dollars in advertising, low interest rates and rebates can't do.

Like GM, XM has gone into desperation mode. In a recent move designed to counter the "Howard Stern Effect", XM inked a deal Oprah Winfrey for $55 million to create an Oprah-specific channel called "Oprah & Friends". It's a three year deal that will feature audio reruns of Oprah's show, health and fitness advice and a thirty minute weekly show featuring Ms. Winfrey and her "close friend" Gayle King. The bottom line is that XM threw away $55 million to get thirty minutes of Oprah chatting with her friend Gayle King each week. This isn't content that people can't get for elsewhere for free. It's the same problem with Oprah's O Cable TV Channel. The O Channel is a failure because it doesn't get much personal attention and unique programming from Ms. Winfrey.

There is also the issue of audience demographics. Oprah appeals primarily to women who watch her daytime TV show. And while women buy and drive as many cars as men; men tend to drive the purchases of aftermarket electronics and are more likely to be enthusiastic about subscribing to satellite radio than their female counterparts. It's just a fact.

The bottom line is that in the war of satellite radio personalities, Ms. Winfrey will lose to Howard Stern. Mr. Stern's show is only available on Sirius. He appeals to the key male demographic market satellite radio targets. He is committed to programming two full channels with original programming not available anywhere else. He has an option to program a third channel. The first two channels give Mr. Stern and subscribers to Sirius up to 48 hours of original programming each day. And if you missed Howard on your morning drive, you can catch a rebroadcast on your way home. This is something that was never available on terrestrial radio.

XM bought Ms. Winfrey star power and the right to use her name in its marketing. But you only get thirty minutes of her original show once a week. XM also promotes Ellen DeGeneres, Snoop Dog and David Bowie as personalities associated with XM. Unfortunately, none of those personalities create original, not-available-elsewhere programming. Replays of Ms. DeGeneres' daytime show fill most of the time on her channel. Snoop Dog and David Bowie merely give advice in the capacity of executive producers for music channels. You don't hear their voices live on a daily basis.

Another big draw for XM was NASCAR. NASCAR and GM vehicles seem a very good match as GM is still able to sell product to the fans of NASCAR. NASCAR barely makes the news in Los Angeles; but it is HUGE in many other parts of the country. XM lost NASCAR to Sirius in 2007. Although XM inked a few deals to give some of the famous NASCAR drivers (e.g., Jeff Gordon) their own show hour-long shows, those short shows won't be enough to either acquire or retain subscribers. You can hear the drivers interviewed live at any NASCAR race.

It seems that the fortunes of XM are riding with GM, and right now, that's not a ride most investors, let alone customers, want to take. Both companies are in crisis mode and both companies have turned to their marketing departments to beef up sales and profits. However, marketing can only introduce new products to customers. If you have good products and services, customers will find you and keep coming back. Both XM and GM have relied on marketing to sell substandard products and services. The result is loss in market share and financial trouble. While both companies are scrambling to find a way back up, the competition isn't sleeping or lying on the proverbial laurels.

In a short time, Sirius will introduce a small converter module, aimed specifically at GM vehicle owners with factory-installed XM radios, which will, for about $100, convert XM radios in GM cars to Sirius receivers. Once customers aren't trapped into one satellite radio service, then the free market will really determine which service will survive or whether both businesses will be viable.

If both XM and GM are to survive, both need to focus on the product. And right now, in the small-but-growing world of satellite radio, Howard Stern and Sirius are trampling Oprah Winfrey and XM.