It was an encouraging but not a completely reassuring sign that Sirius Satellite Radio [SIRI] hit the 700,000-subscriber mark Oct. 18. The milestone suggests that the company ended third-quarter 2004 with more than 650,000 subs rather than the 634,433 estimated by Baltimore-based investment firm Legg Mason. Sean Butson, Legg Mason’s satellite radio analyst, said Sirius added the last 100,000 subscribers in 42 days to equal roughly 2,381 net new additions per day. That compares favorably with the 55 days it took for the company to add its last 100,000 subscribers when its growth rate was 1,800 new subs per day.

The key growth drivers appear to be the company’s $220 million, seven-year pact to broadcast virtually every NFL game along with a recently launched program for the company’s satellite radio equipment to be included as a factory-installed option in new Chrysler [DCX] vehicles, Butson said.

Sirius management is maintaining its year-end subscriber target of 1 million, which the company appears more likely to hit based on its rising growth rate. Legg Mason projects Sirius will finish the year with 973,435 subscribers. But even this success hasn’t shaken the company’s reticence to advise buying more shares.

“While we are pleased with the solid subscriber growth, we are maintaining our hold rating due to concerns over the company’s high cost of adding such subscribers,” Butson concluded.

(Sean Butson, Legg Mason, 410/454-5917)