Sirius Radio in All Toyota Cars - Analyst Blog
January 09 2013 - 10:00AM
Zacks
Sirius XM Radio
Inc. (SIRI) 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 (TM). 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. (P) 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.
(LMCA). 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 Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
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