updated 04:10 pm EST, Fri November 7, 2008
Directed quits sat radio
Directed Electronics announced earlier this week that it will leave the satellite radio market, ending its agreement to act as Sirius satellite radio's exclusive retail distributor as of January 31st, 2009. The company says this is due to the softening market for the subscription-based service and, along with Sirius XM's more than $1 billion in debt, is calling the agreement an unfavorable "risk-reward tradeoff."
As part of the dissolution, Sirius XM will buy back Directed's satellite radio hardware stock in the first quarter of next year and assume all responsibility for all product returns and warranty issues submitted after January 31st. Directed currently has about $27 million in Sirius inventory, according to DEI Holdings CFO, Kevin Duffy.
According to Directed parent company DEI Holdings president and CEO, Jim Minarik, Sirius is planning on selecting a new distributor. Sirius XM is going to fall short of its earlier projected subscriber numbers at the end of 2008 and 2009, by about 400,000 and 900,000, respectively, from 19.5 and 21.5 million.
Directed became the primary retail distributor for Sirius Satellite Radio well before the latter company's recent merger with XM back in 2004. Directed will now focus on its core brands, including Viper, Clifford and Python.