Sirius XM Radio Inc.
) the largest satellite radio broadcaster in the U.S. has
announced that its radio service will now be available in the
entire vehicle line up of Japanese Car manufacturer
Toyota Motor Corporation
). Tying up with the world's largest car manufacturer greatly
enhances the growth prospects for Sirius.
Toyota's multimedia system will now come equipped with Sirius
XM radio systems and will also be a standard feature on all
vehicles fitted with Toyota's popular Entune System. Sirius XM
radio service has been available in Toyota cars since 2004, but
it is only now that it has been made a standardized feature in
its entire vehicle line up.
Sirius XM broadcasts music, sports, news, talk, entertainment,
traffic and weather news in the U.S. and Canada for a
subscription fee through its proprietary satellite radio systems.
Customers purchasing new Toyota vehicles will get a three month
Sirius XM subscription featuring free music, premier sports talk,
live events and comedy, among others.
Satellite radio is easy to use and is gaining popularity among
customers buying first hand cars. The large variety of
programming offered by Sirius XM will make the Toyota customer
journey even more enjoyable.
We believe tying up with the auto giant will provide a strong
revenue stream for the company going forward as Toyota expects a
2% sales growth in 2013 based on a resurgence of auto industry in
the U.S. Additionally, it also puts Sirius XM in a better
position as compared to rival
Pandora Media Inc
) who is also vying in the auto space.
Notably, though the deal is beneficial to Sirius XM, the
company that will yield the biggest gain is its majority owner
Liberty Media Corp.
). Recently, Liberty Media received a shot in its arm as the
Federal Communications Commission (FCC) has approved the transfer
of control of broadcast licenses of Sirius XM. Theoretically, it
means that Liberty Media can now control more than 50% of Sirius
XM and is expecting to assume decisive control of the radio
broadcaster within 60 days of gaining FCC approval.
We maintain our long-term Neutral recommendation on Sirius XM
Radio. However, it holds a short-term Zacks Rank #4 (Sell).
PANDORA MEDIA (P): Free Stock Analysis Report
SIRIUS XM RADIO (SIRI): Free Stock Analysis
TOYOTA MOTOR CP (TM): Free Stock Analysis
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