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XM Satellite Eyes A Deal With GM

XM Satellite, fresh on the heels of a deal signed with GM subsidiary Delphi Delco to design and manufacture XM car radios, is understood to be close to striking a deal that will see GM offer its radios as original equipment with new cars and trucks.

Neither XM Satellite or its competitor, CD Radio, has as of press time inked a deal with an automaker, but in a recent filing with the SEC, CD Radio says it was told by GM that the automaker “expected to shortly conclude an agreement with XM Satellite Radio to manufacture and sell vehicles capable of receiving XM’s satellite radio broadcasts.”

The filing notes that XM’s satellites are being constructed by Hughes, a GM subsidiary, and that through Hughes, GM owns about 25% of XM and is represented on XM’s board.

CD Radio says it and GM subsequently “ended discussions” on an OEM agreement.

XM Satellite declined to confirm a deal with GM. A spokesperson said, “We’re in ongoing discussions with a number of people.”

Tom Steckbeck, CD Radio receiver marketing director, said that if the XM/GM deal goes through it would be a positive one for the emerging satellite radio technology.

“We’re not surprised that GM would be working with XM Satellite based on their relationship,” Steckbeck reasoned. “But this is great for satellite radio because it is further validation of the category. We expect this will speed up entry into the category by other automakers.”

CD Radio is in discussions with American, Japanese and European automotive manufacturers, added Steckbeck. “From talks we’ve had, we know the automakers see this as a major part of next-generation in-vehicle entertainment.”

With the latest partnership developments, Delphi – best known for its Delco brand of automotive audio and electrical parts – now has agreements with both of the companies with FCC licenses to provide digital satellite radio signals. Both plan to launch in the fourth quarter of 2000.

“By inking this deal with Delphi we are continuing to execute on our strategy of forming ‘best-of-brand’ alliances in every category,” said XM Satellite president Hugh Panero.

“We wanted to have a foot in both camps,” said a Delphi spokesperson. “Whoever makes the hardware would naturally want to cover all the bases.” The spokesperson said that while Delphi would initially manufacture separate radios for CD Radio and XM Satellite, there may eventually be a radio able to receive either or both subscription systems.

Delphi joins XM’s other development and manufacturing partners, including Alpine, Pioneer and Sharp. In addition to Delphi, CD Radio also has a hardware agreement with Recoton and its Jensen division.