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I haven't tried satellite radio. The Polk home XM tuner has digital optical and coaxial output and I would assume that it outputs 16 bit samples at 44.1 or 48kHz which would be compatible with most DACs, but I don't know for sure.
I haven't tried any digital output sat radios, but I can't imagine that running through a DAC of any type would help very much. The low bit rates and compression on either Sirius or XM makes it sound *horrifically awful*. I had my Sirius PnP receiver connected to my good home system (AVA Omega preamp/amp, B&W 803s), through analog, of course, and it sounded like it was being transmitted from a bus station restroom, even on the good channels. All sorts of high-frequency metallic "reverb", and having all that extension up to 20khz was not helping. This was the first time I used the "filter" button on my OmegaEC. Analog TV sound is actually an improvement over Sirius and XM broadcast. It's a shame, too, because it really is a convenient way to go, if you could listen to it for more than an hour.
The Sirius streaming service is 128K and it as least tolerable to listen to - it would be worth using as a home source, and would probably benefit from a better audio chain than using the analog output from a computer sound card.
On a related topic, does anyone know what bit rate/compression is used in ATSC (over-the-air digital TV) for audio? I have noted that the digital TV sound from a local jazz station (KCSM JazzTV, digitial 43.3 for Bay Area residents) is fantastically good. It really surprised me how well that works.
Brett