Sirius XM Radio (Nasdaq: SIRI) doesn't play favorites when it comes to its automotive partners. It would be bad business.
When Sirius and XM were separate companies, each one would compete to be the satellite radio provider of choice for the leading automakers, culminating in deals for factory-installed receivers in which the car manufacturers would receive a piece of the action for any paying accounts after free trials ran out.
General Motors (NYSE: GM) was an early partner -- and even investor -- in XM. Even though it's largely Sirius executives running the show since the Sirius XM merger three years ago, it certainly does seem as if GM is the satellite radio favorite these days.
Sirius Buzz's Spencer Osborne unearthed the latest GM promotion over the weekend, detailing how the leading automaker is offering a full year of XM -- including NavTraffic for those buying vehicles with DVD-based navigation systems -- to new GMC Sierra buyers.
GM typically offers just three months of service to new buyers before hoping they convert into self-paying subscribers.
The deal doesn't have a published expiration date, but it's not likely to last long. This is the time of year when automakers are trying to clear out the 2011 models. It also isn't clear if it's GM taking the hit on the nine extra months or if Sirius XM is helping out.
Either way, it's not much of a mathematical incentive. Saving roughly $13 a month for nine months doesn't seem like a major incentive for a pickup truck that retails for more than $20,000. Less than half of new car buyers -- 45.2% as of Sirius XM's latest quarter -- continue to pay the satellite radio giant after their free trials run out. In other words, it's not an offer with universal appeal. However, it has to be comforting for Sirius XM to see the offer being broadcast on the GMC home page.
GM should be chummy with Sirius XM. Rival carmakers continue to make it easier for smartphone-owning drivers to go beyond terrestrial and satellite radio. Toyota's (NYSE: TM) Entune and Ford's (NYSE: F) SYNC AppLink serve up nearly seamless access to Pandora (NYSE: P) streaming through car speakers, even if it may encourage some of those drivers to bypass premium subscriptions for Sirius XM.
We'll know who Sirius XM's favorite partner is soon.
"We expect to be able to announce -- by year-end -- launch plans for at least one of our OEM partners to begin factory implementation of 2.0 features as early as next year," Sirius XM revealed during last month's quarterly conference call.
Sirius XM 2.0 is the beefed-up platform that the media company plans to roll out at the retail level later this year. OEM stands for "original equipment manufacturers," or in this case, carmakers. If one partner is going to be singled out as the first to offer Sirius XM 2.0, that either hints at favoritism or implies that one automaker is just nimble enough to execute the shift sooner than its competitors.
GM may not seem "nimble" by any stretch, but it has to be the odds-on favorite to be the company that Sirius XM is referring to during the second-quarter call. Sirius XM and GM may be an odd couple, but they do appear to be happy together -- and isn't that what counts?
If you want to see how Sirius XM stands up to the stream teams, add Sirius XM Radio to My Watchlist.
