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Sirius Radio in All Toyota Cars

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Sirius XM Radio Inc. (SIRI - Free Report) 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 - Free Report) . 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 - Free Report) 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).

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