Partnerships

The Mini brand has seen tremendous and consistent growth in the United States. While the sales numbers have been growing, the car itself has not….until now. Beginning February 16th, the all new Mini Clubman will be hitting dealer lots. Mini fans can now enjoy a roomier ride whale maintaining the distinctive style of Mini.

Audio fans can also rejoice in that Sirius Satellite Radio as well as HD radio are available on the Mini Clubman. Pre-wiring for Sirius as well as HD Radio comes standard. For $1,000 you can add Sirius with a lifetime subscription, of for $500 you can add HD radio. As with all Mini’s, your options and combinations of features are nearly limitless.

Position - Long Sirius

Sirius announced an agreement today that extends Sirius’ exclusive relationship with Chrysler through September 2017. This agreement spans all of Chrysler’s brands including Chrysler, Jeep and Dodge vehicles.

It’s hard to look that far down the road but, 9 years and a greater than 70% penetration rate of factory-installed radios is certainly great news with or without the merger.

“SIRIUS is proud to extend our exclusive relationship with Chrysler, Jeep and Dodge,” said Mel Karmazin, CEO of SIRIUS. “Chrysler will be selling millions of vehicles with SIRIUS and we look forward to a very significant number of Chrysler customers becoming part of our already very satisfied SIRIUS family of more than 8.3 million subscribers.”

If you surf the net, or read this site you will see that Toyota has launched a new on line advertising campaign featuring the all new 2009 Corolla. Toyota has given the Corolla a new richer styling, and the advertising is quick to point that out. The Corolla has long been seen as an entry level car, but these days, entry level cars can include amenities such as satellite radio and navigation. Given the price of gas, a car such as the new Corolla is sure to be a big seller.

For satellite radio watchers, the new Corolla will not disappoint. Both Sirius and XM are available. Toyota puts marketing push behind XM in both the on line Google ads, as well as on their tour of the Corolla, but those that want Sirius can get it as it is a listed option on the car.

With uncertainties in the auto sales world for 2008 predicted by many, consumer value will be a big factor in car purchases. Consumer value is no longer just about price, it is what you get for your money, and this ad campaign by Toyota gives consumers a clear picture of all they they can get for a reasonable price.

Go ahead, check out the new Corolla on Toyota’s website. Even if it is not a car that you would consider, the richness of the ad campaign is worth seeing.

Position - Long Sirius, Long XM

Ford, which seemed to stay in first gear for a long time with regards to satellite radio is ramping things up quickly, and is introducing some great in dash entertainment options in their vehicle line-up. By 2009, Ford should be cruising along at top speed with Sirius and SYNC. The company anticipates showing off their latest and greatest at CES this Sunday with an announcement of what comes next for SYNC as well as an introduction of Ford’s new SIRIUS Travel Link navigation system.

“Ford’s goal is to deliver the smart, connected in-car experience that customers today demand and to lead the industry into a new era of in-vehicle connectivity,” says Derrick Kuzak, Ford’s group vice president of Global Product Development, who will attend the International CES, the world’s largest consumer trade event and showcase for new technologies.

“Ford is answering the call with the best technology solutions from companies like Microsoft and SIRIUS, connecting customers with mobile devices, important information they need on the road and bringing the experience to life with the latest in navigation technology and branded audio,” Kuzak adds.

Ford anticipates that SYNC systems will be in 1,000,000 cars by early 2009. Ford’s SYNC connects users to their music, their cellphones, and more.

Ford SIRIUS Travel Link navigation system which promises to allow users access to up-to-the- minute information and entertainment content through the vehicle’s navigation system. The system offers navigation, traffic data, weather, gas prices, movie prices, and much more.

Travel Link works through the existing SIRIUS satellite and repeater infrastructure - offering uninterrupted, coast-to-coast coverage. Specifically, the Ford SIRIUS Travel Link system provides information on:

Continue Reading »

Sirius Satellite Radio and Ford announced today that they are targeting a 70% installation rate for the Ford and Mercury brand of automobiles. Ford had previously announced that their Lincoln brand was effectively at standard equipment. This commitment with the Ford and Mercury brands is a substantial step for Sirius, as it brings Ford up to a similar installation pace as Chrysler.

The Ford and Mercury brands have sold nearly 2,000,000 cars through October of this year, and are on a pace for over 2,600,000. At 70% installation, this would represent annual installations of over 1,800,000 from these two brands alone. Add roughly 150,000 installations from Lincoln, and Ford Motor Company is anticipating about 2,000,000 Sirius installations per year. On top of that there is the Jaguar, Volvo and Land Rover brands to consider. The bottom line is that this is very positive news for Sirius as well as satellite radio as a whole.

Throughout 2007 the OEM channel has been identified as the growth area for satellite radio. With Sirius’ major partners now all committing to offering satellite radio installations at 70% or better, the outlook for 2008 and beyond looks more positive.

Position - Long Sirius, XM

Satellite radio sector watchers who follow these equities closely are well aware that Directed Electronics is the distribution partner for Sirius Satellite Radio’s receivers. With the merger announcement, there has been a question as to who the ultimate distribution partner of a merged Sirius and XM would be. This put some pressure on Directed, as there was no certainty as to how long Directed’s ties with satellite radio would last.

Today Directed announced that they have extended their relationship with Sirius through August of 2008.

“While the pending merger between SIRIUS and XM has added a degree of uncertainty to the satellite radio market during 2007, as well as our agreement renewal discussions, we believe this amended agreement will serve as an excellent template for future extensions we plan to discuss after regulatory review of their merger is fully resolved in the coming months,” concluded Mr. Minarik.

Directed stock saw a 65% upward swing on the news and is now trading at $1.86 from $1.11 on higher than normal volume.

Merger watchers should not read too much into the deal. Even with a merger, the switch over to a single platform for Sirius and XM was not an immediate event, and the length of time for the a-la-carte radios to hit the marketplace seems to coincide with the expiration of the Directed contract. This could mean that the merged company is still free to negotiate with current distribution and manufacturing of both Sirius and XM.

Position - Long Sirius, XM, and Directed

The UAW and Ford Motor Company have reached a tentative labor agreement. The agreement was reached in the early morning hours of November 3rd, and can potentially avoid the short term strikes that happened with GM and Chrysler. If the deal is ratified by the union membership, it will bring to a close all of the negotiations for automakers, and the dust can settle over the coming years.

For satellite radio investors, this news represents a consistency of production of satellite radio equipped vehicles. This aspect is of great importance because the OEM channel is currently the driver for satellite radio subscriptions. The automotive channel has been consistently announcing deeper installation rates during the course of 2007, and it is anticipated that Ford, a Sirius partner, will be making an announcement regarding installations soon.

Bringing this uncertainty to a close in combination with what is typically the strongest quarter for retail should give the sector some stability as an announcement regarding the merger is awaited.

Position - Long Sirius, Long XM, No Position Ford

The strike seemed to be over as fast as it began. In what has to be seen as a surprise by many, the UAW strike of Chrysler lasted only hours. Many suspected that the two sides were not close enough to agreement as yet, and some expected the strike to last longer than the two day GM strike.

The deal shows concessions by both sides, and carries many similarities to the contract that the UAW reached with General Motors. This leaves Ford as the last remaining of the U.S. big three to work out a contract with the UAW.

For Sirius shareholders, the short lived strike will now carry minimal impact on Chrysler’s contribution to the Q4 OEM subscriber numbers, and further that Sirius Backseat Television will have a regular presence at Chrysler brand dealerships. Chrysler is targeting a 70% satellite radio installation rate. The last concern for Sirius investors now is the Ford negotiations.

Position - Long Sirius, Long XM, No Position OEM’s

The 11:00 deadline came and passed without the UAW and Chrysler reaching an agreement, and now workers in 17 out of 22 Chrysler plants have exchanged their post on the assembly line for a picket sign. Analysts following the issue seem pretty consistent in their assessment that the strike will last longer than the two day General Motors strike of two weeks ago

The heart of the issue seems to revolve around health care and job security for the union side, and competitiveness and the bottom line for the private equity owners of Chrysler. It is estimated that the strike will cost Chrysler $50,000,000 per day. At this point no time-frame has been set for talks to resume. The nearly 50,000 workers that are now on strike will receive strike pay of only $200 per week. At this point, if the strike is not mere posturing, the question may be whether Chrysler’s existing inventory will outlast the works desire to live off of $200 per week. More news on where things stand should become available over the next 24 hours.

For investors in Sirius, there are two issues to consider. The first is obviously production of vehicles which translates into subscribers. We estimate that the impact could be in the neighborhood of 4,000 subscribers per day that were anticipated as being in the Q4 subscriber counts. The second issue centers around the launch of Sirius Backseat Television. Chrysler is just now launching vehicles with the service, but new production has now ceased. Chrysler has a one year OEM exclusive on the product, and while some Sirius Backseat Television equipped vehicles are available, the pipeline will dry quickly as there is not a large inventory of 2008 vehicles on dealer lots at this point.

Position - Long Sirius, XM. No position OEM’s

The UAW deadline for a deal with Chrysler is fast approaching. Unless an agreement is reached by 11:00 AM Wednesday morning, some 49,000 UAW workers will hit the picket lines at Chrysler. In the past, UAW deals tended to be pretty typical for all of the big three auto makers. This time however, the three companies have differing needs, and the new privately held Chrysler presents interesting hurdles in the talks.

The union is seeking job security and maintained health benefits, but clearly some concessions were made by the UAW in the GM deal. There is a possibility that the current contract they are operating under could get some brief extensions if talks seem to be progressing. Many analysts feel that Chrysler’s inventory situation could allow them to operate at normal sales levels for about a month if a strike happens.

For investors in Sirius, a strike will take on a role in the Q4 OEM subscriber numbers. Sirius’ subscribers from Chrysler are counted at the time the subscription is paid for by Chrysler. This typically happens at the end of production of a vehicle. Prior to this negotiation, it was anticipated that Chrysler would produce between 6,000 and 6,500 units per day. With a 70% installation rate for Sirius, that equates to somewhere between 4,200 and 4,550 subscribers per day. A prolonged strike without a substantial ramp up afterwards could carry some bearings on Q4 OEM totals. It would be prudent for an investor in this sector to follow the UAW story as it develops.

Position - Long Sirius, Long XM, No Position OEM’s