Will Automakers Define Sirius XM’s Fate?

After months of deliberating with the Federal Communications Commission, Liberty Media Corp. (LMCAD) has completed its bid for a majority stake in Sirius XM Radio (NASDAQ:SIRI). The media company purchased 50 million shares of Sirius at $3.15 a piece, bringing its total stake to 50.7 percent.sirius banners

Liberty Media’s chairman, John Malone, had been gunning for a controlling interest in Sirius for a while. Malone believed that former CEO Mel Karmazin, who left in December, wasn’t expanding aggressively or adapting to new technology quickly enough. In a market that has grown increasingly competitive over the past few years, this was apparently inexcusable.

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But as the sole satellite radio provider in the United States, Sirius has enjoyed tremendous success over the past few years. That is, after nearly going bankrupt in 2009 after the financial crisis. Shares are up over 2,770 percent since January of 2009, when they were trading at about a dime a piece. Now, at over $3 per share, investors are being won over by the media company’s potential.

Part of that potential is Sirius XM’s commanding position in the in-car radio market…

Sirius radioEarlier in January, Sirius XM announced the next stage in its relationship with the world’s largest automaker, Toyota (NYSE:TM). The arrangement will ramp up the availability of the satellite-radio service in nearly all Toyota models, locking in a huge and lucrative market. Sirius already claims as much as 70 percent of the in-car market.

But it’s not all good news. At the Consumer Electronics Show this year, Ford (NYSE:F) announced a partnership with Rhapsody to provide the Internet music service is over 1 million Ford and Lincoln brand vehicles. Rhapsody will join Pandora (NYSE:P), Slacker Media’s web radio, and Clear Channel‘s iHeart Radio as part of Ford’s integrated media arsenal. Rhapsody CEO argues that “our customers see the limitations of terrestrial radio and Sirius XM satellite radio.”

If automakers believe this, the Sirius could see its majority share of the market begin to erode away. However, as it stands, all the trends indicate that it is in the best interest of automakers not to play favorites, and adopt both technologies.

Sirius XM Radio Inc. Stock Chart - SIRI Interactive Chart - Yahoo! Finance

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