DaimlerChrysler has followed General Motors, Ford and BMW in choosing sides in the satellite digital audio radio (SDAR) market.
Daimler agreed to invest $100 million in Sirius Satellite Radio and offer factory-installed Sirius radios on an exclusive basis for five years, with an option to renew for another five years.
The Daimler deal covers all Daimler brands sold in the United States, including Mercedes, Chrysler, Jeep, Dodge, Dodge truck, and heavy-truck brands Freightliner and Sterling.
Freightliner, which markets both truck brands, is the first truck manufacturer to commit to SDARS and enjoys the biggest share of North America's heavy-duty truck sales, Sirius said.
As part of the agreement, Daimler will begin offering factory-installed Sirius radios, and possibly car-dealer-installed models, for all of its vehicles in calendar-year 2001, said a Daimler spokesman. As yet, it's not certain whether the radios would be available in time for 2000-model-year vehicles, and it hasn't been decided which car lines in 2001 would offer the radio as standard or optional equipment, the spokesman said.
Daimler and Sirius also agreed to cooperate to integrate two-way telematics services with Sirius receivers, which are addressable. The services could include security, convenience and navigation but won't be available in 2001, Daimler's spokesman said.
In a written statement, Daimler president Jim Holden said Sirius "has a superior system."
Sirius also has agreements with Ford and BMW. In mid-1999, Sirius reached an agreement with Ford to offer Sirius radios for nine years in all of its car lines, including Volvo. That deal, however, is exclusive only through 2002, and it doesn't include an investment in Sirius by Ford.
In January, Sirius announced that BMW will offer its service in all of its U.S. BMW and Range Rover vehicles as soon as 2001. For audio programming, the deal is non-exclusive, but for telematics services, the deal is exclusive, according to Bear Stearns managing director Vijay Jayant.
For its part, General Motors previously agreed to offer service by Sirius competitor XM Satellite Radio on an exclusive basis for 12 years. That deal also included a 20 percent ownership stake in XM by GM, 10 percent directly and 10 percent through DirecTv.
Despite stipulations calling for periods of exclusivity in the Daimler-Sirius, Ford-Sirius and GM-XM deals, it's not clear whether those time frames will be cut short, given the FCC requirement that all SDARS radios eventually be able to receive both services. The FCC has not yet stipulated a time frame for implementing the mandate, said Bear Stearns' Jayant.
Whenever interoperable radios hit the market, the financial terms of all of the automaker deals would probably change. All of the deals involve sharing subscription revenues with the automakers and subsidizing the automakers' SDARS receiver costs, Jayant said. The XM-GM deal, he noted, includes a stipulation changing the terms when interoperable radios are required.
Sirius has said interoperable radios capable of receiving both services would be out 18-24 months after the services' launch in 2001, added Jayant.