Thursday, March 24, 2005

Hyundai dials up XM radio deal

The automaker will install receivers as standard equipment on all U.S. cars.

By Ron Day / Bloomberg News

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XM Satellite Radio Holdings Inc., the biggest subscription-radio service, said Hyundai Motor Co. will make XM radios standard in all vehicles sold in the United States.

Hyundai Motor America will be the first automaker to install the receivers as standard equipment, Washington-based XM Satellite said. About 75 percent of Hyundai's U.S. cars will be sold with the receivers by the end of 2006.

XM Satellite and rival Sirius Satellite Radio Inc. are trying to get automakers to install the digital radios at factories because it increases the chance that car buyers will become subscribers. About six of every 10 buyers of cars with XM Satellite installed subscribe to the service, which features dozens of commercial-free music, sports, weather and traffic channels, XM spokesman Chance Patterson said.

"It's a great win for XM," said April Horace, an analyst at Janco Partners Inc. in Greenwood, Colo., who rates both companies "buy" and doesn't own the shares. "Making it standard across the board is a pretty big statement, because Hyundai has historically sat on the sidelines" in offering satellite radio.

Sirius has exclusive installation agreements with Ford Motor Co., DaimlerChrysler AG and Bayerische Motoren Werke AG. General Motors Corp., the world's largest automaker, and Honda Motor Co. offer XM receivers as factory installations.

Shares of XM Satellite rose $2.41, or 8.6 percent, to $30.45 in Nasdaq Stock Market composite trading. They have declined 19 percent this year. Sirius rose 14 cents to $5.42 and have dropped 29 percent this year.

Sirius, based in New York City, said Wednesday that its receiver and service will be available as an option on DaimlerChrysler's Mercedes-Benz M-class sports utility vehicles. The unit and six months of service will cost $500, Sirius said in a prepared statement.

Hyundai buyers will get the service free for 90 days, Patterson said. The receiver combines AM, FM and XM Satellite, he said. Hyundai Motor is South Korea's largest automaker.