It was a good week for the two competing digial audio radio service (DARS) providers. Sirius Satellite Radio’s [SIRI] first satellite launch was successful and XM Satellite Radio Inc. [XMSR] now is funded fully through its commercial launch.

…Show Me The Money

XM Satellite earlier this week completed funding necessary to take the company through commercial launch, with the addition of $235 million from the investor group, AEA Investors Inc., Honda Motor Co. and others.

The investment consists of a purchase of newly issued convertible preferred stock, with investments of $60 million from AEA, $50 million from Honda, $50 million from Madison Dearborn Partners, $35 million from Barron Asset Fund, $20 million from DirecTv [GMH], and $20 million from Columbia Capital. The stock can be converted to common shares at a price of $26.50 per share.

The fact that half of the investment came from existing equity partners demonstrates that they “continue to have much confidence in the DARS industry as a whole and XM in particular,” said Banc Of America Securities in a report issued this week.

The low conversion price has not hampered XM’s stock performance. “Usually you don’t see the conversion price come in that far below the market value (XM is trading in the mid- to upper-30s currently),” said Marc Crossman, satellite analyst at J.P. Morgan. Crossman noted that this deal could have been in the works from back when XM was trading around 26.

…Things Are Getting Serious At Sirius

For Sirius, the first major hurdle toward commercial service launch was accomplished July 1 when the company’s first satellite, the Space Systems/Loral-built [LOR] Sirius 1 was launched successfully from the Baikonur Cosmodrome in Kazakstan.

“Satellite radio is a reality,” said David Margolese, chairman and CEO of Sirius Satellite Radio. “The deployment of Sirius 1 means that within weeks we will be able to verify the fundamental capabilities of our system, including a coast-to-coast signal and digital-quality sound,” he added.

XM Satellite Radio was no less proud of the launch. “We congratulate Sirius on today’s successful launch of the first of its three satellites,” said Hugh Panero, president and CEO of XM Satellite. “This is a significant milestone that positively impacts the satellite radio business,” he added.