Carmakers Factory-Installing Satellite Radio
2005-03-23 16:25:00
XM Satellite Radio Holdings Inc. on Wednesday said it has signed a deal to have its satellite-radio service factory-installed in all Hyundai models by 2007, and rival Sirius Satellite Radio Inc. said its service would be available for some Jaguar and Mercedes-Benz models starting this year.
The announcements boosted the stock of both companies. In afternoon trading on the Nasdaq, XM Satellite shares were up $1.79, or 6.38 percent, to $29.83, and Sirius stock was up 10 cents, or 1.89 percent, to $5.38.
Hyundai America Motor said it was the first automaker to agree to offer satellite radio across all its models, taking the service downstream from an option in luxury cars to one available to a mass market. XM Satellite, which, like Sirius, is sold on a subscription basis, offers more than 150 channels of special programming, music, news, weather and sports.
Robert Cosmai, president and chief executive of Hyundai Motor America, said the company's research with consumer focus groups found that there was a demand for the service.
"We had more interest than we had expected, so we really thought we had to get moving on this," Cosmai said.
Automakers have been expanding their offerings for in-vehicle entertainment, including backseat video for entertaining children. Other consumer electronics added to cars, particularly luxury models, include hands-free mobile phone communications, map services and Internet access for finding restaurants or places of interest.
While satellite radio wouldn't make or break a deal for a new Hyundai, it does add another feature at no extra cost, Cosmai said.
"This is a great opportunity to expand our brand identity in another area," Cosmai said. "This adds another layer for the customer to consider when they make their decision about a Hyundai."
Starting in 2006, stereo systems supporting XM radio would be factory-installed in all Sonata, Santa Fe, Elantra and the upcoming replacement model for the XG350 premium sedan, Hyundai said. Remaining models would support the service by 2007.
Car buyers will get to try the XM Satellite service at no charge for three months.
In the Sirius deals, the company's 120-station service will be a factory-installed option available next month on the 2006 Mercedes-Benz M-Class sports utility vehicle. The luxury carmaker plans to expand the offering to six additional 2006 models later this year, and four 2007 models next year.
Jaguar, which is owned by Ford Motor Co., said the Sirius service would be available next month as a dealer-installed accessory for the 2005 X-Type, X-Type Wagon, S-Type and XJ Sedan models. The service would be available in the near future for 2006 models of the same cars.
XM Satellite and Sirius have been spending heavily on programming and sales and marketing in order to attract subscribers to a relatively new market. Both companies reported losses in the fourth quarter ended Dec. 31, but increases in their number of subscribers.
Sirius ended 2004 with 1.14 million subscribers, and XM Satellite with 3.2 million.
As examples of the big money the companies have spent on programming, XM Satellite signed an 11-year, $650 million deal to broadcast Major League Baseball games beginning with the 2005 season. Sirius signed a five-year, $500 million contract with shock jock Howard Stern, who is scheduled to move his popular morning talk show to the radio network in early 2006.
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