DISH, Sirius, RadioShack Ink Alliance

By Greg Tarr -- TWICE, 2/23/2004

NEW YORK — RadioShack, satellite TV provider EchoStar and satellite radio provider Sirius Satellite Radio announced a three-way alliance that makes EchoStar and Sirius the exclusive satellite entertainment services sold through the national retail chain and gives EchoStar's DISH Network subscribers access to Sirius satellite radio streams.

The three-way alliance will make RadioShack a one-stop-shop for satellite entertainment, the companies said. Len Roberts, RadioShack CEO, said the chain would install a merchandising area in the front of its stores for the unified offerings, using, in some locations, space that was formally used for RCA home entertainment goods.

"One of the reasons we wanted to re-purpose [the Thomson equipment] space was because we were getting ready with this joint venture," Roberts said in conference call announcing the alliance.

Roberts said RadioShack would equip the new satellite entertainment area with a variety of portable plug-and-play and home do-it-yourself products, including docking kits and boom boxes featuring Sirius' service offerings. RadioShack will have access to all of the after-market brands that currently carry Sirius services, although the retailer didn't indicate which of those brands it would carry.

The retail chain will outsource installations, where necessary, through "a contract network of installers. The strong opportunity for us, though, is in the portable end of that business," Roberts said.

Under another part of the deal, EchoStar said Sirius music programming would be available to the majority of its 9 million customers when the marketing program debuts this spring. The Sirius service will be offered to subscribers to EchoStar's America's Top 120 basic channel package, but will not be on some lower tiers.

"Day one I would say we will have [Sirius service] in excess of 6 million homes, and we are going to try to program it so that the Sirius numbers in your car line up with the numbers on your DISH set-top box," said Charlie Ergen, EchoStar CEO.

EchoStar said that "at this time" it continues to also offer Muzak commercial-free music channels for home and commercial accounts.

DISH Network was already the exclusive satellite TV service sold through RadioShack, following the retailer's decision at the end of last year to drop both DirecTV services and its exclusive hardware marketing relationship with Thomson's RCA, a leading supplier of DirecTV equipment.

Joe Clayton, Sirius' CEO, said Radio-Shack's 7,000 stores would expand the number of retail outlets carrying his service three times to 20,000 points of sales across the country. The relationship will also open carriage of Sirius equipment and services to EchoStar's 10,000 independent satellite TV dealers and installers.

EchoStar dealers will have access to Sirius mobile radio equipment, branded with both the DISH Network and Sirius logos. EchoStar will acquire the hardware from Sirius for distribution to its retail accounts. Undisclosed additional commission opportunities will be available for dealers, a spokesperson said.

All three companies expect to benefit from the added exposure of planned collective marketing activities, including print and radio broadcast advertising, monthly promotional flyers and inserts, in-store displays, and sales training.

The three companies said they would also develop other marketing strategies to promote their alliance, including the possible development of new products and services.

Clayton said that by offering Sirius services in DISH Network homes, the company expects to add significant incremental sales of equipment and subscriptions for mobile systems. He added that once DISH subscribers get used to listening to Sirius' exclusive commercial free radio channels at home, they would want them for their cars, trucks, vans and boats as well.

Clayton said Sirius' goal is to add 2 million new subscribers over the course of the "multi-year agreement," adding that the new arrangement lead Sirius to raise its end-of-year estimate for new subscribers from 860,000 to 1 million.

Ergen said the deal includes performance incentives for all three companies, although Sirius declined to disclose the economic details.