...but I'll try to give you the Reader's Digest Condensed Version (and much of this is conjecture).

Sirius was in serious trouble.  XM had the better OEM deals, and the clear lead in subscribers.  They HAD to sign Stern, and Stern knew it.  They quite possibly could have gotten him for much less money, but the then-CEO of Sirius, Joe Clayton, also knew that whatever check he wrote he'd never be around to be held accountable for anyway.  So, the game-changing signing.  But it changed the game in ways nobody anticipated.  XM then rushed out and overpaid for Major League Baseball (though baseball is a much better radio sport than football, plus baseball has displaced fans all over the place that would have no other way of hearing their favorite team on radio).  Whether or not they got pressure from their OEM sponsors to make a big splash signing to counter the Stern effect is open for speculation.

Anyway, at that point the die was cast.  Both companies were gambling that the exponential growth rates would continue and they could get to cash-flow break even and then profitability before all the debt started hitting the fan.  Well, then the economy (and car sales) tanked.  And the rush was on to merge because the political atmosphere was right for it to be approved (a laissez-faire FCC and Justice Department re: antitrust issues).  The NAB was able to keep it stalled out for a long time, and the uncertainty did neither company any good either.  Had they known it was going to take as long as it did (and cost as much as it did), I doubt they would have pursued it.  One or both companies would have most likely filed for reorganization at some point, extinguished some debt and restructured other, we'd still have 2 independent satellite radio companies today, and listeners would be MUCH better off).

 As for it being Sirius that "won" the merger of "equals" (as it was called), I credit that to Karmazin being a better negotiator (and bluffer) than then-XM Chairman Gary Parsons, who is an engineer by background.  The market capitalization of both companies is not even remotely near what it was as separate entities, and has only gone downhill even more rapidly since the merger was consummated.  I think the Sirius stock price bottomed out at around .11 a share - currently it's around .85.  Liberty Media bailed them out of an almost inevitable post-merger bankruptcy filing.  Currently NASDAQ is threatening SXM with delisting unless they get the stock price over $1.00 and keep it there - it made it above $1.00 for a short period on the momentum from analyst upgrades, but it hasn't been able to maintain it.  A reverse split is possible if they don't win the argument with NASDAQ.

With that background, back to your original question:  the answer is we'll never know, but they certainly wouldn't have lost as much money as fast as they did.  Satellite radio was reaching the tipping point of widespread consumer acceptance on its own - it just wouldn't have gotten there as fast, and the slow down in OEM rollouts due to the economy was simply horrible timing.  But the Sirius deals with the NFL and then Stern, and then XM's deal with MLB more or less completely destroyed the business model.  The only people who have made out well in this mess are Stern and the prior and current executive suites of both companies (and traders that have exquisite timing with shorting and going long).  As I said at the start of this, books are going to be written on this whatever ends up happening, and the complete (and sometimes downright reckless) miscalculations by both companies' executives aren't going to be treated gently.  Having said all that, I believe satellite radio is here to stay.  It has proven the market for pay radio is there.  If internet radio ever gets to the point where it can be reliably and consistently received in cars, that would be another game-changer, but not necessarily the death of SatRad as some predict.  It's going to continue to be an interesting story to watch.