AT&T: Does Sirius XM Have a New Competitor?

Includes: SIRI, T
by: Rad Sat Daily

This has been flying a little bit under the radar, but yesterday AT&T Services Inc. (NYSE:T) and RaySat Broadcasting Corporation launched AT&T CruiseCast after a slight delay due to the GM (GMGMQ.PK) bankruptcy announcement.

The significance of the launch is that Sirius XM Radio (NASDAQ:SIRI) is no longer the only satellite radio provider in North America, less than a year after the merger between Sirius and XM satellite radio.

AT&T CruiseCast will offer 22 satellite TV channels and 20 satellite radio channels. The AT&T CruiseCast service comes at a steep price at $1,299 equipment cost and the monthly subscription fee is $28. Because of the steep initial set up price, initial installs may be slow until equipment cost and prices come down.

Let's take a closer look as to why the AT&T launch could potentially be a big deal for Sirius XM Radio.

  1. Sirius XM Radio offers a BackSeat TV offering for $6.99 that displays cartoons in back seat of Chrysler vehicles. The AT&T CruiseCast 22 satellite TV programming shows much more than cartoons with a greater variety of channels from kids and family, documentary, music, comedy, news, and sports programming. With the current strategic partnership between Sirius XM Radio and Liberty Media (LINTA), we can possibly expect in the future for Sirius XM Radio to beef up its back seat offering due to Liberty's relationship with DirecTV (NYSE:DTV). This is total speculation but it makes sense. The Sirius XM BackSeat TV offering could then have more offerings than just cartoons and be available in more vehicles than just Chrysler vehicles. This could potentially then make AT&T CruiseCast and Sirius XM Radio direct competitors in the in car TV space. Sirius XM Radio could then potentially have an advantage due to its existing relationship with car manufacturers. AT&T CruiseCast still needs to develop relationships with car manufacturers. Sirius XM Radio obviously would need to evaluate bandwidth considerations in any potential offering.
  2. AT&T CruiseCast currently offers 20 satellite radio channels as part of its launch offering. In the future, a company like AT&T potentially has the reach and resource to decide to bolster its satellite radio offering on CruiseCast making it a more direct competitor in the satellite radio space to Sirius XM Radio. Sirius XM Radio currently offers over 150 channels so AT&T would have to do a lot of bolstering but it’s amazing that in less than a year after the merger between Sirius and XM Radio a new satellite radio provider has emerged even if on a lesser scale.
  3. AT&T CruiseCast recently worked out a deal with Crutchfield to offer the CruiseCast product on Crutchfield is a good source because it can provide multiple options for TV headrests, etc. This shows that AT&T and RaySat are serious about getting awareness of its CruiseCast product out there.

Does Sirius XM Radio really have a new competitor? What do you think? If AT&T can figure out a way to get the initial equipment costs lower in the future, then it's possible that Sirius XM Radio will have some new competition onwards.

View the AT&T CruiseCast Channel Lineup here.

Disclosure: Author holds a long position in SIRI, no position in ATT