Sirius Keeps Its Hands on the Wheel

Sirius XM Radio (Nasdaq: SIRI  ) is back where it belongs … behind the wheel.

The satellite-radio provider announced a smart deal with BMW yesterday. Buyers of certified used Beamers that have satellite-radio receivers already installed will be given three free months of Sirius service. Now, buyers of secondhand BMW cars will have at least a few months to consider whether satellite radio is something that they want to pay for.

This was a logical move for two companies that have been in cahoots since 2004. Sirius is offered as a factory-installed option on new purchases, and the first year of service is baked into the price of the car.

Sirius XM needs more deals like this, since it has mostly stumbled outside the showroom. It's fading in retail channels, where year-over-year subscription declines have been a quarterly occurrence.

Even the ballyhooed program for Apple's (Nasdaq: AAPL  ) App Store is getting lost in the shuffle mode. As of last night, the app had fallen off the Top 25 screen of Apple's most popular downloads. Pandora and the music-recognition program Shazam are now more popular in Apple's music category -- further evidence that iPhone owners gravitate toward free sonic solutions.

Sirius XM's easiest sells have come through its deals with GM and Ford. Auto manufacturers push the satellite receivers in exchange for a piece of the financial action, and roughly half of those who partake in free trials wind up paying to keep the service active.

Carmakers are also giving audiophiles what they crave through CD-ripping hard drives and iPod jacks, but the auto industry has an interest in pushing satellite radio until in-car routers become a more feasible big-ticket growth service.

No, BMW may not provide the ideal target audience. However, the satellite receiver is already there, and any signups will be incremental. Sirius XM surely wants more, but moves like this are definitely what it needs right now.

Other ways to slice and dice satellite-radio fandom:

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Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He owns no shares in any of the companies in this story and is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 21, 2009, at 6:17 PM, BigVincent wrote:

    [QUOTE By Rick Aristotile Munarriz]It's fading in retail channels, where year-over-year subscription declines have been a quarterly occurrence.

    Your literature is so misconstrued. As I recall subscription decline, which means that there was more churn and less paying subscribers has only occured in the 1st quarter of this year of 2009. Yes there have been declining numbers since early 2007 in the retail end, but why does that matter when sirius/xms bread and butter is in the OEM car market.

    Sirius/xm radio for the home market has always been slow at a snails pace this means portable docking receivers, and home stereos equipped with sirius/xm radio will probably always be slow. Although this is the slowest addition to satellite radio the home market actually has the least churn when compared to the OEM car market.

    [QUOTE Rick Aristotle Munaririz]No, BMW may not provide the ideal target audience. However, the satellite receiver is already there, and any signups will be incremental. Sirius XM surely wants more, but moves like this are definitely what it needs right now.

    You fail to realize Rick. BMW and Mercedes is the yuppie mans car. People that have money buy satellite radio just for the simple pleasure of having it. After all it is a luxurios item to have in a BMW, or Mercedes Benz.

  • Report this Comment On July 21, 2009, at 6:34 PM, georgetag wrote:

    I had Sirius when Howard Stern first moved over. I was able to listen to his show in the afternoon which was great. What wasn't great was the afternoon rerun show was loaded with commercials. There were other things I liked about Sirius, but I guess it wasn't worth 13 dollars a month to me.

  • Report this Comment On July 21, 2009, at 8:50 PM, WoodyDog1400 wrote:

    "No, BMW may not provide the ideal target audience"

    People that drive BMW's still listen to music, listen to politics, CNBC, CNN, and even Stern. What are you talking about Rick? They are the perfect fit, they have the cash to subscribe to it! The GM/Ford people likley do not know as many are jobless or about to be foreclosed on. That's the middle class you idiot.

    Rick, when did your boss give you a performance apprasial last? Can I participate in the next one? Your performance is terrbile with reviewing SIRI...The google discussion board spam is more intelligent.

  • Report this Comment On July 21, 2009, at 11:52 PM, TMFBreakerRick wrote:

    BigVincent, the quote specifically singles out "retail" as the serial decliner.

    And as for BMW's audience, I am referring specifically to the certified pre-owned audience at BMW which is impacted by the deal. Someone buying a used car -- even if it is a relatively marked up dealer-sold one -- is less likely to have the means to pay $13 (or $15) a month for satellite radio.

  • Report this Comment On July 22, 2009, at 12:20 PM, DCDeliberate wrote:

    It is hard to compete in the iPhone Apps department when the playlist of Sirius XM does not have the adventurous character it once had. Pandora and Shazam will always beat them at that if these radio peepa do not get clue.

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